PlatformsFeb 18 2013

A good year for platforms

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ByDavid Ferguson

Platforms will need to adapt to offer more than just funds to meet the changing needs of advisers in 2013.

Just more than one month into the RDR and as the new regulatory environment starts to take shape we’re feeling pretty pleased about the past 12 months and excited about the future.

Last year was undoubtedly a year of change for the whole platform market and the advisers who are the lifeblood of platforms – but unlike some of our competitors much of our change was driven less by the RDR and more by a desire to take greater control over our business and to continue improving the platform.

Platforms (particularly provider-owned ones) will need to recognise that future margins are going to be much tighter than historic ones. The winners will be those who recognise this and are able to deliver great service and functionality while making a profit on these tighter margins. That won’t come easy to everyone.

I believe the whole industry is heading in a new and better direction, with the winning platforms of the future those able to broaden their propositions beyond access to just funds.

Where some platforms seek to peddle in-house products to make their business models stack up, others are taking a rather different view and doing everything they can to excel in their role as infrastructure providers to quality adviser firms.

I have no doubt that in time every legacy product will be reinvented for a platform world. We will start to see a change in the way products are built and used in the UK.

At Nucleus, this market evolution is already taking shape, and living proof of this is our recent relationship with Integrated Protection Solutions (IPS) which enables us to pilot a unique protection product for our firms.

As part of this evolution we will continue to notice an increase in the range of investment solutions available to advisers and their clients, with structured products, cash deposits, investment trusts, exchange-traded funds and securities all becoming more easily accessible and available. It’s something we are already seeing, with the platform now covering roughly 5,000 assets and about 1,400 clean share classes, having added 1,500 funds in 2012 alone.

As a result of all this progress I am sure we will also start to see some of the older propositions ‘re-platform’ themselves, as the underlying technology they use becomes increasingly outdated and unfit for purpose. It is important to remember, many of the old guard were built to solve a very specific provider-led problem from the past, not serve the increasingly varied adviser needs of the future.