The adviser platform market is a hive of activity on the surface. Proposition changes, new tools, M&A, technology developments. However – despite the febrile nature of the market – shifts in platforms’ market share are glacial.

Platforms primarily compete over new advised assets, advisers favouring one or two platforms for new clients. However, advisers take on relatively few new clients – the average was 14 new clients per adviser in 2021. If a new or existing client already has platform assets then they are likely to be topped up, but left where they are.

Advisers are generally reluctant to transfer business between platforms. They would rather continue using inferior platforms – even ones they dislike – than move client assets. Barriers to switching have come down and it’s rare to see platforms charging exit fees these days. But switching is still time consuming. The requirement to actively recommend a new product, with all the associated suitability rigmarole, is mentioned as the most significant barrier.

Even if an alternative platform is cheaper, switching might not save the client enough money to justify the advisers’ time and cost. This is especially true since platform pricing has come down – there are often only a few basis points between them.

This all conspires to slow down shifts in the market. New platforms struggle to build market share. Some ‘legacy’ platforms arguably cling on to assets for longer than they should. Too many advisers use too many platforms and show little impetus to drive greater efficiency through consolidation onto much fewer platforms.

But market shares are shifting, and it’s the same groups outpacing their competitors year after year: AJ Bell Investcentre, Aviva, Transact and True Potential. Although, at this rate it will take another 5-10 years before they surpass those at the top.

Platforum recently published its annual overview of the adviser platform market. Please get in touch for more information.