Novia co-founder Bill Vasilieff has warned the lack of profitability among adviser platforms will start to hurt in 2020.
He said: "There is no doubt that 2019 has been a relatively difficult year for platforms due to uncertain markets and a lack of consumer confidence. I say relatively difficult as although gross and net sales have fallen on 2018, and quite sharply in some cases, they are still positive and assets under administration continue to rise rapidly. It’s not a bad market to be in.
"But while assets are rising, I continue to be amazed that so much focus is placed on sales and so little on profit and loss. We continue to see exits from the market from big institutions who just give up trying to get to profit and exit after having made years of losses, and there are more on the way.
"I have been in the platform market since it started in the UK and the big players have always claimed that they would take the market as you needed, ‘deep pockets’ to compete; alas for them these deep pockets have bottoms to them and the shareholders are pulling the plug.
"It is time these institutions came clean on the profit position of their platforms although, by sifting through the accounts it can often be deduced that there is still a lot of money being burned. Profit is the mark of success and survival, not sales."
He said that technology is the major cost for platforms, and dealing with the issue is akin to "trying to fix the engine in a car when it’s running down the fast lane on a motorway".
A feature of 2019 has been the consolidation in the market, with Embark buying both Zurich's platform and the advised business of the Alliance Trust Savings platform.
Mr Vasiliff said this consolidation was a function of the tough economic conditions facing platforms, and he expected robo-advice businesses to struggle in the year ahead. He said those companies had tried to disrupt the platform market, wracking up huge losses in the process.
He said: "I have always said from day one that people with money always want advice from a person, not a computer, and I have always predicted widespread failure of robo-advice as the cost of customer acquisition is prohibitive.
"After struggling for years to gain traction and failing, we are starting to see them throw in the towel with exits, and sales to established institutions. For those that remain, escalating losses; the highest profile, Nutmeg, announced their results for 2018 and losses had ballooned over 50 per cent to a staggering £18.6m."
During 2019 Investec closed its Click & Invest robo-advice business after two years of losses, saying the market for this service was growing "at a much slower rate than expected".
It came after UBS sold its SmartWealth robo-advice service to an American company in 2018, having decided the short-term potential of the business was "limited".