Platform assets in transition have increased substantially, according to the Lang Cat's latest quarterly platform market scorecard.
The leading platform, pension and investment consultancy estimates that around 90% of the £519bn assets held on adviser platforms are now either officially or expected to be affected by a major business change event such as a technology upgrade or move, floatation, or sale of a significant element of the business.
Mark Polson, principal at the Lang Cat, said: “2017 was at once a success for platforms and a massively difficult period. By our estimates, almost 90% of advised platform assets are subject to some major form of business disruption which may cause advisers to re-examine their choice of platforms. This figure includes businesses that are replatforming, floating or selling a significant element of their business.”
The scorecard also highlighted, however, that this disruption within the platform market has not affected new sales growth, with record gross inflows of £20.3bn recorded across the sector during quarter four 2017. This was compared to £18.6bn in quarter three 2017 and £17.7bn in quarter two 2017.
Mr Polson said that pension freedoms driving assets into DC pensions and ongoing market buoyancy had “continued to produce some solid numbers”.
He said: “We note that 20% of Old Mutual Wealth’s 2017 platform inflows were attributable to DB transfers, and expect this high level of business to continue for many platforms – unless regulatory intervention puts a brake on the market.
“As we’ve seen time and again, switching technology is brutally difficult even when it goes well – and it rarely goes well. We’ll see some very interesting developments in 2018 as OMW’s programme continues, and as Aegon starts to move retail advised assets from Cofunds onto its upgraded ARC platform. These exercises are a chance for the sector to show it’s learned from the issues of the past.”
Mr Polson said: “Outside of replatforming, we’ve just experienced our first platform IPO from Transact which seems to have gone smoothly, but there is always the danger that corporate activity distracts management from day-to-day operations.
“For advisers, this means continued uncertainty and, with more corporate transactions likely over the next 18 months and some replatforming exercises dragging on, it doesn’t look like it will end soon.”
He added: “We’re often asked how advisers should respond: we hate to be boring but for the most part, they should sit tight and wait to see how things pan out.”
The Lang Cat report added that net inflow winners last year were the combined Standard Life and Elevate business with roughly £7bn of net inflow, followed by Aviva’s advised platform with £5.8bn. Also notable on the net flow front were AJ Bell Investcentre, Old Mutual Wealth and Transact.