Written by Kevin Okell on Tuesday 30 September 2014
With a couple of exceptions, the 2013 accounts for all the top 20 adviser platforms have now been filed and, after a brief foray into profit last year, it looks like the industry has slipped back into the red – see graph below. The cause appears to be a combination of rising costs and falling margins with the average bps yield falling once again to 34 from 39 last year (and from 50 in 2010).
The rising costs are a bit harder to pin down but it appears that there was a collective £60m increase across the platform sector last year. Of the top 20 platforms, only 2 actually reduced costs and the majority increased pretty much in line with revenue. Which is precisely the trend we pointed out two years ago when we first started tracking this data.
RDR changes may account for some of this but, since platforms were supposed to be the big winners from RDR, it would seem quite an expensive victory. With several of the top 20 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 next year either.
So it’s even more important to get a firm grip on where platform costs are headed and to make sure those in-flight technology projects deliver a solution that can bring that red line down. All in all it’s looking like a very long game.