Ironically, the RDR could be hindering short-term platform market growth with a muted take-up expected ahead of deadline, expert predicts

Press Release

Independent platform consultancy, The Platforum, predicts a muted growth of new business written on platforms in the run up to the RDR deadline as Q4 2010 saw 77% of new business written off platform.
Figures collated and analysed in the fifth quarterly (plat)Form Guide show that in the last quarter of 2010 a staggeringly high percentage (77%) of new business was still being written off platform.
Although this is down from Q3 it still means the split between new business written on and off platform is 23% and 77% respectively and highlights the slow growth in this area. This situation is compounded by over 5,000 advisers placing all of their business in Q4 off platform, a 14% increase on Q3 2010.
The key stats, taken from the (plat)Form Guide and based on Touchstone data, are:
• 124 IFAs placed all of their business via platforms in Q4 10, down from 129 in Q3 2010
• 5394 IFAs placed all of their business ‘off’ platform in Q4 10, up from 4730 in Q3 2010
• ‘On’ platform new business via IFAs was £2.99bn in Q4 10 (23% of IFA market), up from £2.76bn in Q3 2010
• ‘Off’ platform new business via IFAs was £10.16bn in Q4 10 (77% of IFA market), down from £10.27bn in Q3
The Platforum managing director Holly Mackay says: “Anecdotal evidence points to this muted uptake of platforms continuing right up until the 2013 deadline. Over 5,000 IFAs are still placing all of their business off platform and for platforms this represents a huge opportunity to grow assets.
“On the other hand, for life companies without platforms this represents an encouraging story. The question, of course, is how sustainable is this off-platform market?
We think that this muted uptake of platforms is to some degree inevitable until commission is finally banned in 2012. The fee conversation is not an easy one to have with clients and some advisers are avoiding change and continuing to place business in a commission environment for as long as possible. This explains some trends such as the growth in multi-manager and the continuation of strong off-platform sales.
We think that adviser platform adoption will only see significant spike once the RDR deadline is upon us and no new business can be written in a commission environment.”