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Price war looming for platforms

TCF Fund Managers co-founder Gary Mairs says a platform price war is likely to break out in a fight for market share.

Mairs,who is also founder of Folio Partners, says platforms are largely commoditised products so price will inevitably go down.

He adds: “When there are lots of players in a commod- itised market that is highly competitive, there will be a price pressure.

“There could be a proper price war. You could cut price to win volume and then put the price back up – go for volume, wipe out the competition and reprice up again afterwards.”

Last week, Axa removed the 1.5 per cent initial charge on the bundled pricing model of its Elevate platform and earlier this month Transact said it is also reducing costs on its wrap. In September 2008, Skandia cut the initial charge on its platform.

Threesixty partner Phil Young says: “I do not see existing, mature platforms looking to drop their prices dram atically as too much of their future growth will come from existing assets on the platform rather than new business and they will not want to cut their own throats.”

But he adds: “It is bec- oming increasingly diffi- cult to differentiate platforms and any new entrants may have to differentiate based on price alone.”


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