The vast majority of financial advisers expect platform consolidation to accelerate over the next few years, according to Scottish Widows.
Scottish Widows’ latest Investor Confidence Barometer showed 61% of advisers expect platform consolidation to gather pace over the next three years, increasing to 75% among firms managing more than £500 million.
More than nine in 10 (92%) advisers believe platform competition is important for client outcomes, while 72% recognise the importance of niche providers and over a third (35%) are worried about the extent of platform consolidation.
Nearly two thirds (62%) of advisers believe the collapse of a platform would impact their business, with a quarter (23%) strongly agreeing with this sentiment. Increased private equity ownership of platforms also emerged as a key concern among advisers, with 52% citing this as a concern.
Jenny Davidson, intermediary wealth director at Scottish Widows, said: “Competition is good for advisers and clients. It keeps the market vibrant, driving innovation and a focus on good outcomes and value. However, the market is currently suffering from pressure on revenues and increasing costs from managing regulatory change and investing to meet the increasing expectations of advisers and their clients. Platform consolidation feels inevitable.”
Davidson said the risk for advisers is that their platform of choice becomes “collateral damage”, leading to a constrained and less competitive sector.
“This further emphasises the importance of picking a platform that is financially strong and committed to a future in the market, with a clear roadmap for growth. As advice firms continue to expand their client base in the coming years, there will be increasing pressure on platforms to demonstrate their robustness and ability to meet the extra demand.
“Stability and the ability to continually invest in best-class experience will stand out as key pillars for supporting the next generation of advice businesses,” Davidson added.
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