While advisers have a clear focus in seeking value for customers, it is essential the platform can support the advisers’ client proposition and business model or it will not be used. Low fees without capability or service will not secure advisers’ support in the longer term.
No one will indefinitely fund a sub-scale operation that cannot deliver sustainable returns to investors. For some, it is a question of achieving the scale. For others, it is about reinvention or crystallising the value that exists today.
The combination of substantial functional demands, a focus on costs and high levels of competition are driving a number of advised platform owners to reflect on whether:
- they can gain the critical mass to be able to invest and develop
- they want to operate in the platform market at all
- there is an option to cut their losses and crystallise available value now
- they can find a buyer
- they want to prioritise the adviser market
- they can change their business model and become an adviser/discretionary fund manager.
Platform consolidation could be a self-fulfilling prophecy: the platform market relies on confidence, and unease about long-term viability is already influencing platform selection. New business from advisers flows towards platforms perceived to be running sustainable business models and away from those where perceptions are less positive. Platform relationships should operate as genuine partnerships and this demands loyalty.
In the current market, many advisers will, no doubt, be reflecting on whether their loyalty is well placed.
David Tiller is head of adviser and wealth manager propositions at Standard Life
