The Platforum: IFAs will need execution-only platform post-RDR

Advisers operating after the retail distribution review (RDR) will need to have an execution-only platform in order to gain a greater hold over clients' assets, according to platform consultants The Platforum.

The Platforum managing director Holly Mackay (pictured), said research showed many customers used both execution-only and advice services and argued IFAs needed to take advantage of the trend. 

‘We think most adviser businesses in the future will need to have a sort of execution-only platform,’ she said, speaking at the launch of The Platforum's research into the direct-to-consumer platform market.

‘If you’ve got to pay someone two hundred quid an hour and you’ve got a £10,000 Isa the economics don’t stack up, so for the advisers I thinks it’s a question of, "Do I acknowledge that and try and retain a relationship or do I pretend it's not happening?".'

‘A lot of direct customers today also take advice. There are a lot of IFAs out there today whose clients are also Hargreaves Lansdown customers.’

Consultant Lucian Camp, who co-wrote The Platforum paper, said an execution-only service would be 'absolutely complementary' to IFAs' existing propositions.

'If you are an adviser in the post-RDR world and you want to maximise your share of the customer's wallet when it comes to simple transactions like choosing an Isa, and customers are baulking at paying a fee just for that... then you need a platform proposition or they will go away.’

The research also showed the D2C market in the UK was worth £65 billion in September of 2010, compared to the advisory platform market, which accounts for around £130 billion. There are 2.5 million D2C accounts, with the average account size being £28,288, and the average age of account holders is 57.

Hargreaves Lansdown accounts for 29% of the D2C market with £18.5 billion under administration. Barclays Stockbrokers is the second largest, accounting for 15.4% of the market and £10 billion. Fidelity and stockbrokers TD Waterhouse complete the top four offerings.

The Platforum’s research suggested the D2C platform space was set to become increasingly competitive. It said the dominance of stockbrokers, which account for 60% of the market, would be increasingly challenged by banks and big consumer brands.