Advice firm consolidation could lead to more white label platforms being created in 2024, according to Jackie Leiper.
The CEO of Embark Group believes white label platforms, those under an adviser’s and not a platform provider’s control, could become more popular as consolidators look to create their own.
Leiper said: “The consolidation trend has been and will continue to be intimately tied to the growth of white label platforms, as the ‘adviser as platform’ phenomenon continues to gather momentum.
“Doubtless, white label platforms will play a big part in 2024 as we see consolidators looking to create their own platforms.”
A growing threat to the platforms market was already highlighted in a report in 2019, which pointed to "pricing risk" in the market as more advisers consolidate.
The authors of the report from investment bank Liberum wrote: “One risk to [platforms] at a macro level is that adviser consolidation continues to a point that it becomes more economical for advisers to set up their own platforms in order to reduce total costs to clients and protect their own margins."
They highlighted a report from Nucleus at the time, which had shown inflows below expectations due to a combination of a difficult external environment and increased outflows from firms that had been acquired by consolidators.
Since then advised platform flows have been choppy, and saw record levels of outflows this year. But this was mainly attributed to clients withdrawing more to cash savings and to cope with the cost of living.
A positive trend
Overall, Leiper believes the trend to more consolidation in the industry has been positive, supporting advisers and clients alike.
“The trend towards scale and consolidation has continued to gather pace this year, with many more firms being bought and sold,” said Leiper.
“Largely, this is positive with the firms having access to wider distribution networks and the broad range of expertise that these larger businesses bring.
“This enables providers to focus on the fundamentals: delivering great products, resources and tools to help advisers deliver the best results for their clients.”
The past year saw the Embark Platform rebrand as the Scottish Widows Platform.
The new platform did not come without its challenges as advisers have hit out at poor service levels, with one adviser complaining about delays in getting answers to questions.
Scottish Widows has since said it would use feedback from advisers when making improvements to the platform.
Looking towards 2024, Leiper said: “We’ll also be looking to bring even more upgrades to our platform, building on the strong foundation we’ve put in place this year.
“The ultimate aim is to build an adviser ecosystem providing the waterfront of customer propositions for advisers in protecting families, financial planning for the future or saving for retirement.
“This would mean one platform that allows advisers to access industry-leading functionality, tools and investment choice, so that they can focus their advice proposition around good client outcomes and spend more time with their clients.
tara.o'connor@ft.com
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