Hugo Thorman, managing director of Ascentic, said: “As we approach RDR, there is now also demand for what is now termed vertical integration. This means the adviser becomes regulated to run a platform which has important implications for capital and requires suitably ‘skilled persons’ to make it work.”
In future, it is likely that distributors will not be able to retain any margin, so unless they become vertically integrated, they must offer the platform at its price directly to the client and recover their required margin from the client.
Two huge players who have been quietly building market share in the UK are SEI and Pershing. SEI powers Towry, RSM Tenon, True Potential and Bestinvest among others, while Pershing has been quietly piloting their proposition for some years before going public last year.
Of course, one should not forget that Hargreaves Lansdown has been running its own platform, Vantage, for years – and with enormous success.
A key attraction, of course, is retaining the margin. If you are big enough, why give it away? Moreover, the client cannot be wooed by the platform if the platform is yours.
Control is the big issue. The distributor creates the terms and conditions. In the case of SEI, the distributor builds the front end. Thus they can offer their own Isa. They can offer Sipps from as many providers as they like.
As I said earlier, this may mean a restricted proposition. That said, Andrew Fisher, chief executive of Towry, said last year that his firm does not have a platform, but it has an admin hub and he would not expect the regulator to be concerned with whatever administration systems Towry employs. He is, of course, right.
I have always been concerned that the FSA is too keen to regulate platforms as if they were products. They are merely expensive bits of IT, continually developing and changing.
All around the world, people shop at a Walmart, or a Carrefour or a Tesco. They like the choice; they like the price.
It is important that the platform market is allowed to flourish and develop without unnecessary regulatory restraints in order to give the customer a better service at a better price.
Clive Waller is managing director of CWC Research
