Over the last decade, many predicted that the pace of adviser platform consolidation would pick up, though this has never quite happened. Received wisdom was that scale would be essential, but many smaller platforms remain profitable while some larger players have struggled with their financials.
Financial advisers tell us that there are too many platforms on offer in the market. Over half of those surveyed for our UK Adviser Platforms report agreed with this sentiment. Advisers want platforms to get the nuts and bolts right, such as transaction and custody. They don’t want to run business on more than a couple. And they want it at a lower cost.
Advisers have been seeking to improve business efficiency by building out their own tech, including back office systems and planning tools. As integration improves, we have gradually seen platforms reduced to transaction and custody engines that facilitate advisers’ investment propositions.
Arguably there should be fewer adviser platforms in the market. The cost of using institutional platforms is only a matter of basis points. The majority of the adviser market would be satisfied with a few of these operating at scale and low cost, plus a few specialist satellite platforms – provided these plug into advisers’ other systems.
But why hasn’t there been major consolidation of the market? Adviser platforms are either staunchly independent or owned by large life companies or asset managers, who value their MI and distribution potential in their wider business plans. Merging two platforms together is also fiendishly difficult.
We are perhaps too far down the evolutionary journey of adviser platforms to see the small, contracted market that many once predicted. To survive and prosper in this competitive market, platforms must differentiate themselves in the areas advisers value most. That being said, in the current falling markets, some platforms and their owners might be faced with some difficult decisions.
Our latest report, UK Adviser Platforms: Market Overview, looks at all the key trends impacting the adviser platform market and what the future has in store as well as all the latest platform data from 2019. Get in touch to find out more.