Post-Retail Distribution Review the platform market will shrink from 32 providers currently to potentially as few as eight, as consolidation across the sector and failure to generate sustainable profits increases attrition, Tenet’s Keith Richards has said.
Mr Richards, group distribution and development director at the firm, was speaking at an Aviva roundtable today (6 November) on the RDR, at which the pensions provider revealed research showing advisers’ key concern remains maintaining profitability.
According to Mr Richards, the same issue is prevalent in the platform market and could be a key driver to consolidation within the sector. He predicted that the number of providers could fall from its current level of 32 to between eight and 10.
He said: “There aren’t many platforms that are profitable, so how quickly the consolidation happens depends.”
Several panelists agreed that there will be a bigger focus on the direct to consumer market post-RDR.
Andy Beswick, intermediary director for Aviva UK Life, believes there will be a blend of direct to consumer as well as through the intermediary market, adding that the adviser “will be standing behind the consumer” to advise them.
Mr Richards added that moving to incorporate a direct model would be a “logical thing” but emphasised that this would not be a threat to the adviser market but would work “in tandem”.
He highlighted that although consumers would be keen to do the research and look into products, they would not make the decision alone as they are afraid of making a “bad decision”.
Innes Miller, head of advisory services at Threesixty, added: “Consumers will want a direct to consumer offering but through an IFA. Platforms may need different technology to facilitate this.
“The logical players will be product providers and it is an area that banks will be looking into and this will be an area where there will be lots more competition.”