Half of advisers use single platform
Platform assets rose to £164.05bn in the second quarter of this year, a steady rise of 5.34 per cent from the previous quarter.
As adoption increases, we know that the average adviser is using three platforms but that can be a historical position as an adviser may have used a few in the past but is only using one today for new business.
Our research tells us that, for new business, 53 per cent of advisers are only using a single platform. This is a sensible position from a business administrative perspective but one which we think will come under scrutiny after the publication of the FSA’s PS11/9, where the importance of individual client suitability was clear.
Assets placed on platforms have been steadily marching up for the last four quarters. Our friends at Touchstone tell us that in the third quarter of last year, new IFA business written on platforms was £2.7bn. Three quarters later, this had jumped to £3.6bn.
The good news for platforms is that this business is largely sticky. Seventy per cent of advisers tell us they would be unlikely to change platforms in the next 12 months.
Service and price still remain fundamental reasons for advisers to select and use a platform and with the FSA defining best practice in the use of tools, we hear increasing reluctance from advisers to rely on tools provided by the platform.
But while assets are increasing on platforms, an incredible 76 per cent of IFA business is still written off-platform, according to Touchstone, with a notable fall in bond business written on-platform in the second quarter this year.
These statistics are supported by our qualitative research with advisers. Half of those we interviewed in June think that overall demand for bonds will fall over the short to medium term.
Why is so much still written off-platform? Well, 5,441 IFAs still write all business offplatform, again according to Touchstone figures, and a large amount of Sipp and bond business is off-platform too. After the RDR, we would expect fewer IFAs not to use platforms but we still anticipate a (smaller) stand-alone product market.
The trend away from fund picking continues (see chart above). The results show that:
- Fund picking is anticipated to fall by around 5 per cent over the next six months.
- Again, while there is still frequent mention of multi-manager, adviser projections show only a 0.5 per cent expected increase in uptake.
- Model portfolios will see the biggest gain but by only 2.9 per cent.
As for the individual platforms, we have amended our Platforum leaderboard this quarter to include user feedback on functionality and service, AKG financial strength ratings, growth momentum and price. We believe these to be some of the most fundamental points which advisers need to consider in the due diligence process.
With all these taken into consideration, this quarter, our leaderboard was headed by Standard Life, with Elevate, Skandia then Nucleus taking the top four spots.
More information is available for advisers at www.theplatforum.com/pat