Greater platform competition expected amid advice gap

The platform market is more likely to grow than consolidate in the upcoming years, according to platform expert Recep Peker.

Last week, Money Management wrote that the “era of platform promiscuity” – in which advisers utilise several platforms – is drawing to a close, instead replaced by “platform monogamy”.

Speaking to Money Management, Recep Peker, managing director of platform research service SuitabilityHub, said this did not necessarily mean the number of platforms will decrease in accordance.

Instead, the market is likely to grow larger as more specialised and targeted platforms are launched to reach an adviser market. 

“Consolidation is a lower probability overall, it is a higher probability that there will be more platforms not less. Industry funds are very focused on IFAs, fund managers are coming forward with platform propositions, and licensees are developing their own platforms with FNZ.

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“There may be some consolidation from M&A, but over the next few years there will be more choice for advisers and more competition out there so we need to look at how these platforms position themselves for this change and growth.

“Platforms will need to get clearer on their target demographic and how they can serve that client well. They have to be very focused on their value proposition. So they will respond to the low-cost offerings entering the market, but not necessarily by cutting their own fees. 

He said industry funds, in particular, are trying to reach the adviser market, and launching their own platforms could be one way to become more attractive to them, especially as the government is encouraging superannuation funds to ease the advice gap by providing advice to their members. 

One new platform that launched recently is IconiQ, which was launched by Centrepoint Alliance in association with FNZ. The technology firm was originally launched in New Zealand back in 2003 and works with firms such as AMP, Colonial First State (CFS) and National Australia Bank, administering over $2 trillion in assets globally.

In 2023, CFS used the service to launch its CFS Edge platform, which now has $3 billlion in funds under administration. 

“Will we get more activity from FNZ in Australia, it seems a natural target for them and they have a lot of history in Australia,” Peker said.

At the time of its launch, Centrepoint Alliance chief executive John Shuttleworth said the launch presented a significant opportunity for Centrepoint to tap into Australia’s $1.1 trillion platform market.

FNZ was chosen, he said, for its features and functionality and its open architecture solution.

“In developing IconiQ, we have ensured that advisers have access to one of the highest quality investment management and portfolio administration solutions at highly competitive prices. 

“As an ‘open architecture’ solution provider, we are committed to providing a choice of platforms and investment managers. We strive to ensure that clients achieve the best after-fee returns without paying excessive fees for portfolio administration. Leveraging our scale and expertise, we are proud to offer a globally leading platform solution.”