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Aifa draws up guide and warns that only three platforms will survive

Cummings: ‘Far fewer in future’
Cummings: ‘Far fewer in future’

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.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. How do we measure risk in these vehicles? How do we measure financial strength? Take Aviva for example, or Standard Life, how robust are these firms? We thought the big banks were as safe as a… er…. bank..

    Is any investemnt 100% safe? 100% Guaranteed? The compensation regime makes people think they can afford to gamble because if it falls in between the regulatory gaps the FSCS will come bounding to their rescue like a great big cuddly St Bernard.

    Take the banks, they can take risks, reward those who gamble with massive bonuses and not have to worry about losing their shirts.

    If a platform falls over what happens to the investments? If the FSCS ends up being ‘the fund of last resort’ who picks up the levy tab?

  2. Adrian Potter (Winchester White) 18th March 2010 at 10:22 am

    Based upon my ongoing research I’m of the opinion that the “selection of boutique niche platforms” will be those most willing and able to support the needs of the IFA community in the post RDR world. Therefore niche platforms will gain market share and safeguard their future.

    The financial strength of a vendor of technology / provider of administration services is clearly an important consideration when selecting, but the consequences of adopting a platform that limits the products and services that can be used to service clients are in my opinion more significant.

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