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How advisers use wraps and platforms

The big three platforms continue to dominate, but a closer look at the data shows the way that advisers use platforms is changing

When looking at the way that advisers use platforms there are some interesting trends emerging.

Dealing with the obvious ones first, the three giants of the industry, Cofunds, FundsNetwork and Skandia, still dominate the wrap and platform landscape in terms of the total numbers of advisers that use them.

Skandia is comfortably ahead of the other two in terms of the numbers that use it as both their primary and secondary platform. Twenty one per cent of advisers who took part in the Investment Trends research say they use Skandia as their primary platform, while 18 per cent use it as their secondary system and a further 7 per cent use it as an additional platform in their business.

Cofunds and FundsNetwork are harder to separate as they have a very similar number of users, with 13 per cent using Cofunds as their primary platform and 12 per cent using FundsNetwork. The number of advisers that use Transact as their primary platform is the same as Cofunds and FundsNetwork, but that number starts to fall away when you look at the figure using it as a secondary platform.

There is a slight gap between Transact and the next most popular platform, Standard Life Wrap, with Elevate, Nucleus and Ascentric all following close behind.

The top 10 platforms by the number of advisers using them is rounded out by a couple of relatively new entrants to the market.

True Potential takes tenth spot but it is Aviva Wrap’s entry into the top ten. In less than a year, 3 per cent of advisers now use Aviva as their primary system and a further 4 per cent use it as their secondary platform.

The table that shows the platforms that advisers are familiar with echoes the table showing which platforms advisers are using.

Skandia and Cofunds share top spot for the platform that advisers are most familiar with, at 71 per cent. FundsNetwork is not far behind at 60 per cent but there is then a big drop to the next tranche of platforms – Transact (40 per cent), Standard Life Wrap (38 per cent) and Elevate (36 per cent).

There is then another drop to the next set of platforms, Aviva and Ascentric, which are followed by Nucleus, Novia, James Hay and 7IM.

At the other end of the scale are the more consumer-facing wraps such as TD Waterhouse, Selftrade, Barlcays Wealth and Alliance Trust.

The research also throws light on why advisers use and like platforms. The benefits that advisers see for their clients generally have nothing to do with cost but focus on better investment service and the benefits that platforms bring when collating and presenting clients’ investments. The top five benefits advisers cite for their client are consolidated reporting, faster switching, the improvement in clients’ understanding of their finances, improved record keeping and a wider choice of investments. Lower administration costs come sixth on the list and lower transaction fees are down in tenth place.

The benefits that wraps and platforms bring to financial advisers are also based around simplification of administration. The top five benefits that advisers give are simpler administration, consolidated reporting, their ability to save time, improved client proposition and service, and improved record keeping.

The ability to facilitate adviser charging is a new attraction for platforms this year but costs, lower client fees and increased revenues come some way down the list. When it comes to barriers to placing more business, there are still a number of advisers that do not see any real value for their clients, while cost and a restriction on the products available on platforms is also a hindrance to further growth.

The number of advisers who say they do not understand platforms enough is still above 15 per cent. The difficulty in moving investments between platforms also remains a barrier, although concern over this has dropped substantially in the past year and should cease to be a problem at all after 2013.

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