Advisers are backing away from platforms – a trend expected to create a $22 billion hole in platform funds under advice by 2018, according to Tria Investment Partners.
In its latest Trialogue article, the superannuation consulting firm draws on study results from the inaugural 'Tria Australian Wealth Insights Programme', which found the segment of advisers targeting affluent customers expects to reduce their FUA on platform by nearly 10 per cent over the next three years.
Those advisers targeting high-net-worth clients expect to reduce theirs by nearly 5 per cent, while mass affluent-focused advisers predict they will pull 2.6 per cent of their FUA out of platforms by 2018.
While platform use is not expected to disappear entirely, the predicted reductions could have an impact on assets and revenues, the article states.
"Let's be clear: platform usage is and will remain strong across all advice segments. However, the projected reductions have meaningful implications in terms of assets and revenues," the Trialogue article stated.
"If advisers behave in the way they expect, the shift in the affluent segment alone will create a $10 billion hole in platform FUA by 2018. When we take into account the other segments as well, this rises to a $22 billion gap from the current position."
The study also found that affluent-focused advisers are increasingly moving their businesses to direct holdings and ETFs off-platform, even if this means fragmenting client portfolios. Advisers are also continuing to make "full use" of their desktop software applications, including investment portfolio consolidations, and for some removing the need for traditional platforms.
Further, industry funds are increasingly being used for smaller or simpler client segments and advisers who are growing their SMSF businesses have a lower propensity to use platforms, the article stated.
With platform providers therefore facing declining growth and intense competition, Tria believes they should seek to differentiate themselves from each other as a way to remain relevant.
"Platform operators will need to consider their next strategic move carefully before deciding to remain with the crowd, move premises to the high street or open a haute couture boutique," the article suggested.
"But the opportunity to be a first mover might not be available for long."
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