Around 90 per cent of adviser platform assets are likely to be affected by serious disruption of the business which runs the service, according to analysis by The Lang Cat.
Causes of disruption include listing on the stock exchange, changing the technology that powers the service - replatforming - and mergers and acquisitions.
Several platforms are either currently going through the replatforming process or have just completed this, including Old Mutual Wealth and Aviva.
Replatforming is a huge task and is fraught with potential problems.
Adviser users of Aviva's platform have reported widespread and ongoing issues as a result of the current upgrade programme, which have left them unable to view clients' investments and struggling to contact the life company via the phone to work through problems.
Problems began when Aviva for Advisers platform was offline for more days than originally planned in mid-January for upgrade work to allow the platform to move to FNZ Technology Service.
The platform was unavailable for six days beginning on the evening of 17 January as it moved to FNZ, its new technology provider.
But just one day after it came back online after the upgrade, investment advisers found they and their clients were locked out of the platform.
There are still issues with the new client reporting fucntion and technical issues which have affected payments for people in drawdown. Meanwhile advisers have reported they are not getting their payments through the platform.
Beyond replatforming, however, adviser platforms face other disruptive events.
Some have been affected by the platform being bought up and absorbed into a new firm, such as Cofunds into Aegon and Elevate into Standard Life.
Others are pursuing market listings. Transact's parent company, recently completed an initial public offering, floating on the London Stock Exchange, and Nucleus is considering this as well.
Mark Polson, principal at The Lang Cat, said: "2017 was at once a success for platforms and a massively difficult period.
"By our estimates, almost 90 per cent of advised platform assets are subject to some major form of business disruption which may cause advisers to re-examine their choice of platforms.
"This figure includes businesses that are replatforming, floating or selling a significant element of their business.
"As we’ve seen time and again, switching technology is brutally difficult even when it goes well – and it rarely goes well.
"We’ll see some very interesting developments in 2018 as Old Mutual Wealth's programme continues, and as Aegon starts to move retail advised assets from Cofunds onto its upgraded ARC platform. These exercises are a chance for the sector to show it’s learned from the issues of the past.
"For advisers, this means continued uncertainty and, with more corporate transactions likely over the next 18 months and some replatforming exercises dragging on, it doesn’t look like it will end soon.
"We’re often asked how advisers should respond: we hate to be boring but for the most part, they should sit tight and wait to see how things pan out."
Despite all the changes, sales growth in the platform market has not been affected by this disruption, with record gross inflows of £20.3bn recorded during fourth quarter of 2017. This is compared to £18.6bn in quarter three 2017 and £17.7bn in quarter two 2017.
Gross inflows to the advised platform sector were £75bn, and net flows were also healthy at £42bn. The combined Standard Life and Elevate business saw the biggest net inflows with roughly £7bn, followed by Aviva’s advised platform with £5.8bn.
There is a total of £519bn currently held on adviser platforms.
damian.fantato@ft.com
