Aegon is reported to have said previously it would like to become a ‘platform consolidator.’ It would be the first of its kind if that ambition was fulfilled.
Hypothetically, when smaller platform businesses start to flounder it could be Aegon swooping in to snap them up and then assimilate or integrate them, thereby increasing its own scale even further.
In the long term this seems plausible, but in the near term one would imagine Aegon has its hands too full with the Cofunds project to take on additional consolidations.
How likely is it the market could continue to shrink into the hands of ever fewer, larger businesses, as many in the sector predict?
One factor which plays in favour of the increased consolidation prediction is the fact there are so few technology suppliers supporting adviser platforms.
Since IFDS lost the Old Mutual Wealth replatforming contract last year, with FNZ picking up the project instead, there are now really only three main platform technology companies at work in the UK: FNZ, GBST and Bravura.
Lang Cat points out in its 2018 Q1 Platform Market Scorecard the big three technology providers are on course to control 85 per cent of UK advised platform assets under administration.
This means, in theory at least, there will be more and more platforms well-matched for mergers because they will already be running off the same technology.
However, Mike Barrett, consulting director at Lang Cat consultancy, disagrees with this theory because he says the evidence does not support it.
“From a technology supplier point of view, on the one hand it would make the consolidation easier if [the merging platforms] are using the same technology supplier.
“However, the reality is it will not make it radically easier; Standard Life and Axa Elevate are both on FNZ, but the reality is the technology they are on and code bases they use are dramatically different. If you are consolidating onto one technology platform that will take a while.
"It is not a cut and paste job,” he suggests
Smaller is better?
Heather Hopkins, managing director of consultancy Next Wealth, is optimistic about the direction of the platform market since the Financial Conduct Authority’s (FCA) interim report on the platform market study was published.
She said the fact the regulator is seeking to increase the ease with which clients can switch between platforms will increase competition in the market.
Competition has been a key issue for the regulator which has been concerned there is too little of it, resulting in poorer deals for platform clients.
“With the increasing use of platforms, and the issues raised by our previous work, we want to assess whether competition between platforms is working in the interest of consumers,” explains Christopher Woolard, executive director of strategy and competition at the FCA.