The latest research from Altus Consulting has revealed that after a brief period of profitability during 2012, the platform industry has slipped back into collective loss in 2013.
Based on the filed accounts of the top 20 adviser platforms, the aggregate loss across the industry stands at £6M thanks to a combination of falling margins and rising costs.
According to Altus figures, the average yield on platform assets fell to its lowest ever level of 34 basis points – down from over 50 basis points in 2010 and 80 in 2006.
Altus Consulting's July 2013 white paper, entitled The Platform Machine: Tuning for Efficiency, predicted that costs for the majority of advisor platforms would continue to increase in line with revenues.
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Figure 1: Altus Consulting Platform Profitability Chart in 2013
The latest figures appear to support that claim, according to Altus Consulting director Kevin Okell.
He said the platform industry still has a long way to go to turn its impressive AUA figures into bottom line profits.
He said: "There was a collective increase of £60m in cost across the platform sector last year with only two of the top 20 platforms actually managing to reduce expenses.
"It's easy to blame regulation for these costs but the truth is platforms were supposed to be the big winners from RDR and these figures suggest it has been a hollow victory so far."
He added: "With several of the top 20 platforms investing heavily in new technology this year and several more price cuts working their way through the system already, we don't expect this overall profit trend to change much in 2015.
"That is why it is more important now than ever before for the industry to get a firm grip on where platform costs are headed and to make sure those in-flight technology projects deliver a solution that will really bring expenses down."