Top 4 platforms will take 75% of assets by 2022

Friday, 28 April 2017 10:49

A leading investment platform analyst has predicted that 75% of all retail assets will be on the top four platforms by 2022 as consolidation gathers pace.

Heather Hopkins, reserch director at platform monitoring company Platforum, says the consolidation seen in the internet commerce and search area with Amazon, Google and similar firms becoming overwhelmingly dominant would occur in the platform space.

She said: "We see some of the changes we have seen with internet platforms such as Google, Amazon and so on will be followed by the investment platforms.

We are expecting to see mass consolidation of platforms, some driven by consolidation but most by consumer behaviour."

Overall, she predicts that three quarterrs of all retail assets will be on the top four platforms by 2022.

According to Platforum research, the biggest UK retail investment platform is now Aegon after acquiring rival Cofunds. It has assets under advice of £97bn. Fidelity FundsNetwork was second in size.

Some platforms have been buying advisory businesses, she said, but Aegon has no plans to do so and will stick to its plaform-first approach. She said Aegon was rated by advisers as very competitive on large portfolios wih a charge cap of £250,000 in place.

In terms of current research, pension investment is becoming a major driver of platform growth and is fuelling change in the sector, she said. She said that the pension freedoms had been very good for business, advisers reported, and she believes there is "plenty more fuel in that engine." Pension investment is likely to push platform investment and usage further, she believes.

Financial Advisers rate platforms each quarter via Platforum in terms of their rating of the quality of each one. Currently in the lead for service, usability and competitiveness is Transact followed by Parmenion and then 7IM although Alliance Trust Savings was seen as the cheapest because of its flat fee structure. She said, however, that advisers did not place lowest cost as an overriding factor in terms of platform choice.

The top score for platforms is around tax wrappers, seen as one of the most useful facilities and a key area for Financial Planners. Many choose tax wrapper functionality as a key element in their choices. The lowest score is for usefulness of online tools. She said some tools look like they "came from the 1980s" and needed to be improved.