Aifa is developing a platform due-diligence guide for IFAs as it warns that some wraps will not survive.
Director general Chris Cummings says the guide is aimed at ensuring members ask the right questions on factors such as financial strength before choosing a platform.
He believes that the platform sector may eventually have only three major players and a handful of niche firms. He says some providers are
“quite thin” when it comes to capital and others have major financial groups behind them.
He adds: “What happens in most markets is there is a rush for market entry and then as the market settles and solidifies, we end up with a small handful of major players, say, three, but then a selection of boutique niche platforms that serve either very particular types of firm or that can link into the major platforms to offer particular services they do not offer.
“Of course, there are lots and lots of companies around at the moment and our view is that there will be far fewer of them in the future.”
The Investment Quorum chief executive Lee Robertson says: “Although there is some information out there on this area already, from Platforum for example, anything that helps advisers make a decision has got to be good.
“We have seen various platforms from really big providers – Aviva, UBS and American Express – all try and launch and march back out again, so while financial strength is a consideration, it is not the only one.”