Their continuing importance, according to Russell Andrews, a client relations manager at Momentum and author of this paper, is emphasised by the growth in assets under administration on platforms from £160bn to £225bn between 2011 and the start of this year.
This will continue to grow, he adds, as more and more advisers write new business on existing platforms alongside the increase in the platform-based direct-to-consumer market.
In November last year, Momentum warned about likely consolidation among the thirty-something players and Andrews now says: “If anything, the implications of CP12/12 [the FSA-now-FCA paper] may accelerate this exercise as platforms elect to close to new business to avoid the burdensome and expensive developments, or become available to their larger competitors for an acquisition.”
He tips the bigger players – CoFunds, FundsNetwork and Skandia – to benefit through single or even multiple acquisitions.
Andrews adds: “This is because scale will become even more important, as the minimum asset level to break even is likely to increase as fees are squeezed and the cost of compliance, and the transition to compliance, becomes a reality.
“Today’s UK adviser platform market includes more than thirty players but over time we believe this will reduce to between ten and fifteen.”
The final publication of the long-awaited platform paper will be later this month or early in May after it has been approved at the FCA’s board meeting in mid-April.
The ban in platform commission and greater transparency for the end investor is a positive, intended consequence of RDR of which the FCA’s platform paper is a part. Andrews concludes, however: “The one question that exists right now and is likely to remain for some time is ‘at what cost?’”.
