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D2C platform surge fuelled by bank advice exits

The Platforum also predicts increased use of vertical integration models.

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 last 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 as at the end of June 2013, according to The Platforum’s figures. 

Evolve Financial Planning director Jason Witcombe says: “I agree that firms are asking how they can pick up people the banks used to deal with. I’m not convinced many people want to be DIY investors so I can’t see many of these platforms still being around in five years.”

Mackay also predicted firms will follow the likes of St James’s Place and Succession in adopting a vertical integration model.

She said: “In the advised space we have about 30 platforms and I think that market has settled down a bit. But we will see more vertical integration with more distributors saying ‘I want a share of that action’.”

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