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D2C platform surge fuelled by bank advice exits

The direct to consumer platform market has been boosted by clients who used to be served by bank advisers, according to The Platforum.

Speaking at a Tisa event on platforms in London this week, managing director Holly Mackay said anecdotal evidence from D2C platforms indicated they were seeing most of their new client uptake coming from investors previously investing through bank advisers, rather than IFAs.

She says: “Growth in the direct space is not yet, from what I hear, coming from people leaving the adviser space, but from people that have been kicked out unceremoniously from the banks.”

Mackay said early indications of Q3 platform assets under administration figures look strong, with many suggesting AUA growth figures of circa 10 per cent for the quarter.

She added: “If anything we underestimated the continuing acceleration of adviser platform growth post-RDR. I would not be surprised if the combined adviser and direct platform markets exceed £400bn by the close of the year, assuming constant stock markets, which is always the tricky bit.”

Platforms were running £231.4bn at June 2013, according to Platforum’s figures. She adds: ”What is almost certain is that the UK platform market will be a half a trillion by 2014.”

Mackay also predicts large adviser firms will increasingly develop their own vertical integration models in an attempt to increase their share of the value chain.

She said firms such as St James’s Place and and Succession that employ a vertical integration model had seen profits increase substantially.

She says: “I don’t buy predictions of consolidation in the platform space. There is going to be more and more of them as we move forward. In the advised space we have about 30 platforms and I think that space has settled down a bit. But we will see more vertical integration with more distributors saying ‘I want a share of that action’.”

Succession chief executive Simon Chamberlain recently told delegates at the IFP conference in Wales they should ”take control of the funds” to stop the cycle of advisers “feeding from the crumbs” of providers.

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Comments

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

  1. Nicholas johnson 11th October 2013 at 8:58 am

    Buzzzz..repetition. overuse of the word space. In this corporate moving forward space.

  2. I think it would be fair to say that that was inevitable. I think if there was some way of IFAs being compensated for referring their unprofitable clients/enquiries to D2C platforms there would be less of a “them and us” between erm us and them! Of course that sounds like commission!

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