Adviser platform assets continue to rise – despite some major headwinds. In our recently published figures for Q3 2019, the total adviser platform market stands healthily over £500bn, of which assets relating specifically to financial advisers represent around £430bn.
But we have seen a significant slowdown of flows over the course of the year. With one quarter still to come, 2019 looks like it will rank one of the worst years to date in the platform market. Most legacy business has now been migrated onto platforms and DB transfer flows have all but dried up. Political and economic uncertainty felt by advisers and their clients have also been cited by platforms for their unwillingness to invest further.
In the most recent quarter, many platforms have seen net outflows from ISAs, unwrapped funds and offshore bonds. Pension flows continue to prop up the market – over 90% of total net flows went into pension wrappers in Q3.
Away from the stats, the big story of the quarter was Embark Group’s acquisition of the Alliance Trust Savings adviser platform. Their plan is to migrate assets onto Embark’s FNZ-powered platform. This will likely spell the end of Alliance Trust Savings’ flat fee pricing – a model that never quite translated into profitability in the adviser market.
Platform consolidation hasn’t transpired at the pace many predicted. What we have seen recently, however, is the consolidation of technology suppliers. FNZ has been on an acquisition spree, acquiring GBST and JHC Figaro. Will it come up for air or continue to focus on growth? Bravura has also been busy, acquiring the technology supplier FinoComp.
No signs point to any of these headwinds slowing down for platforms in 2020. Client acquisition by advisers is slow, and the consolidation of adviser firms by large, vertically integrated groups also poses a threat. Platforms will hope the cloud of uncertainty clears and flows start to pick up again – potentially wishful thinking.