Terry Huddart, technical communications manager at Nucleus, offers eight steps to help you determine whether your platform will exist in ten years' time
Despite the fact that the number of platforms in the UK keeps growing – up to 30 depending on what you believe a platform actually is – there is continued speculation that there will be future consolidation of the market. Unsurprisingly, this does tend to emanate from the larger platforms that no doubt see themselves as the main beneficiaries of such a situation.
Australia is often pointed to; down under there are now ‘the big five’ platforms and the market is vertically integrated from manufacture to distribution. Given some of the market domination ‘we will become everything’ type statements of late, I think that the prospect of such a model in the UK might send shivers down the spine of advisers who already see their clients under threat from providers.
If a platform is losing money hand over fist in the advised sector, will they look to other strategies such as D2C as an alternative and, even if unintentionally, lose focus on serving advisers and consequently their clients?
Eight steps to test a platform's longevity
However, the UK platform sector is not simply a copy of the Australian one and, importantly, markets on different continents do not always follow the same lines, especially at different times in history. It is becoming ever more apparent that the opportunities of the digital revolution in particular are going to have an increasing impact on how financial services are purchased in the UK.
For the record though, I do not think that all of today’s platforms are going to be here in ten years; there will be some new ones and some that do not make it. But I have my doubts about dramatic consolidation because the demand for choice will be a huge factor.
It is however telling that even large platforms who have been in business for five, ten years or more are continuing to make yearly losses that are counted in the tens of millions. Shareholder tolerance for loss will be key and deep pockets never last for ever. The failure of foreign multinationals who have tried to muscle in on the platform market in the last decade, such as American Express, Macquarie and UBS is sobering.
This article continues...
Breaching SEC rules
In Leeds since 1969
'Sense of autonomy'
5,537 investigations opened in 2018/19
Latest news and analysis