PlatformsDec 8 2014

Platform joint ventures will be popular in 2015: Cofunds

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Joint ventures will take place in the platform market next year, rather than consolidation, Cofunds’ chief executive predicts, adding that banks may be a new entrant.

David Hobbs, chief executive of Cofunds, said that, contrary to speculation, predictions of mass consolidation in the UK platform market will be wrong again next year.

Mr Hobbs pointed out that the headache of harmonising incompatible systems, different clean share classes and policing against client detriment are obvious deterrents. “Plus, platforms have enough on their plate this year with the pension reforms and helping clients get ready for Sunset without getting involved in M&A.

“Rather than consolidation, we may well see joint ventures emerge in 2015 such as newcomers white-labelling existing platform technology to present new D2C solutions.”

Mr Hobbs added that the banks – which still have the most complete network to engage directly with the mass market online, over the phone and face-to-face – may look to enter the market via platform technology being re-badged with familiar high-street names.

Philippa Russell, head of corporate communications at Novia, agreed that it is likely that banks will move into the platform world.

“It would make sense, they have the captive clients, and the brand. Some banks are already in the process of building platforms and have been doing so for years. We would be keen to partner with a bank.”

Danny Cox, head of financial planning at Hargreaves Lansdown, told FTAdviser that banks have had the potential to be a much larger force in retail financial services for years. “At the moment they probably have other things on their mind,” he added.

Michael Barrett, investment platforms expert at Old Mutual Wealth, commented that the key question in the platform market is how much value can a standalone platform deliver?

“Integrating a platform with other services can drive better customer outcomes by delivering a more complete investment service. Therefore it is conceivable that more banks will look at these opportunities, but our view is that people need access to expert advice alongside platform services to get the best outcome.”

Mr Hobbs also stated that next year is likely to see a continuation of the trend for advisory firms to offer execution-only platform-based services alongside advised propositions, partly to service those not wishing to pay for ongoing service, but also to court young professionals who want to start a self-directed portfolio.

“As freedom and flexibility become the watchwords in financial planning, so the lines between advice and self-service are blurring. Advisory firms that can give access to both will find themselves with access to a far wider audience of clients.”