Platforms will need to have at least £40bn in assets under management to survive the margin squeeze caused by new regulations, research by Deloitte has claimed.
The company said increased competition and reduced margins will force investment platforms to consolidate in order to survive, with the amount of assets needed to ensure platforms remain profitable rising as margins get eroded.
Deloitte said the post-Retail Distribution Review (RDR) environment - dominated by clean share classes, an end to commission and visible terms between fund groups and platforms - would all hit platform margins.
Andrew Power, lead RDR partner at Deloitte, said: "One consequence of the RDR is that margins will be squeezed with revenues for platforms likely to fall from about 30bps to 20bps.
"For a platform provider, this could increase the breakeven point from around £20bn of assets to about £40bn. The result will be that the intermediary platform market will consolidate to fewer than ten large providers and a few specialists compared to about 30 platforms today."
Few platforms have anywhere near this many assets currently.
Figures from The Platforum showing assets under administration at the end of Q1 revealed only the 'Big Three' - Cofunds, Skandia and FundsNetwork - had over £40bn.
The three had assets under administration of £52bn, £54bn and £44bn respectively, though some of this is institutional money.
No other platform had more than £16bn at the end of Q1, though the research did not take into account that some platforms - Standard Life among them - are supported by better-capitalised parent companies.
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