Platforms

My guess is that building, acquiring, integrating, replacing, migrating and incurring losses in the intermediary platform space has cost players more than £2 billion over the past ten years. And 2022 is likely to see further challenges.

As we know, there are several different platform models. For example:

• Intermediary utilities such as Transact, Nucleus, and Novia. Interestingly these companies have been profitable for many years and have generated substantial capital events for their founders
• Hybrid models that combine intermediary utility with fund distribution such as Quilter and Standard life. It’s challenging to work out how much these businesses make or lose. I suspect the losses exceed the profits across the space by a considerable margin
• Direct to consumer models such as Hargreaves Lansdown and Nutmeg. The former highly profitable in-spite of the Woodford saga. The latter has incurred mind boggling losses, and amazingly the business has been acquired by JP Morgan for a suggested £700m
• All of these business models are price sensitive to some extent. And given that there is over-supply, and a regulator seemingly obsessed with price, it seems that margin pressure will increase and consolidation and migration will continue.

My estimate is that total platform assets are now in excess of one trillion pounds.