Standard Life’s head of adviser and wealth manager propositions has ruled out the prospect of buying more platforms in the near future as the provider looks to bed down the deal with Axa.
Standard Life announced its plan to snap up Axa’s Elevate platform earlier this month, and also recently bought three independent advice firms for its restricted financial planning arm 1825.
Speaking to FTAdviser, David Tiller said Standard Life will focus on completing the Elevate deal and “ensuring continuity for advisers” before looking at other potential acquisitions.
He suggested it is important to put an offer out quickly when choosing another business to takeover, adding: “If you wait until you are at the end of the queue then you have to take what is left.”
He also said Standard Life has “absolutely no plans” to buy Cofunds, adding “we have just bought the platform we want”.
At the start of this year, there were rumours Legal & General-owned platform Cofunds is set to end up in the hands of the Dutch-owned Aegon UK, which is headquartered in Edinburgh.
Mr Tiller said: “It’s about the fit in terms of business model and sectors of the market; Cofunds operates in quite a different space from us.”
He said all platforms will constantly be thinking about which of their rivals they want to buy or be sold to by looking at which is the best match for their business.
“The technology challenges are massive across platforms, so there is a distinct first-mover advantage in terms of consolidation because you get to choose the platform which is most aligned to your business and is the easiest one to deal with.”
There are platforms out there which are very fragile and the potential for consumer detriment is high. David Tiller This trend of consolidation in the platform market has given Mr Tiller grounds to believe there will only be five adviser platforms by 2021.
He said, however, there is still a long way to go in the consolidation process, which means it is difficult to see which platforms will be left standing at this point in time.
Mr Tiller denied platform consolidation will limit adviser choice, adding the market cannot support the 30 platforms which are currently active.
“There are platforms out there which are very fragile and the potential for consumer detriment if one of them fell over is high, so actually choice for choice’s sake is misleading.”
Mr Tiller said the adviser market is “the hardest platform market to play in” because advisers are making discretionary judgments about the quality of the platform and the investment options available.
“Every adviser has a different central investment process and a different point of view as to what is the right investment universe, which the platform has to be able to accommodate.”
Adviser View
Dan Farrow, IFA and director of SBN Wealth Management, said: “Standard Life’s strategy in the wealth management space seems a little confusing at the moment.
“I think it needs to demonstrate to shareholders that its platform and adviser land grab is going to generate a good return on capital, as acquiring both platforms and IFA businesses just don’t give that at the moment.
“David Tiller’s prediction that there will only be five platforms around in the future is an aberration, as technology will bring in many new entrants, which could hurt existing expensive platforms such as Standard Life’s.”
Andrew Whiteley, director and IFA at Provisio Chartered Financial Planners, said: “Platforms are a commodity at the end of the day.
“With downward fee pressure seemingly affecting every facet of financial services, scale would seem to be the only way to ensure profitability, and therefore further consolidation would seem the logical outcome.”
katherine.denham@ft.com
