We released a preview issue of our new quarterly platform research yesterday – The (plat) Form Guide is available to all our subscribers on the homepage. Platforms recorded a strong comeback in Q309 to record an impressive 18.8% growth from June alone.

There is often discussion about what is included in the platform numbers – are the assets purely derived from those IFAs consolidating a client portfolio into an open architecture, multi tax wrapper solution or are B2C, SIPP-only, legacy and previous ISA assets being squeezed in there, with cries of “It’s not fair” bouncing off competitor walls? Our take on this is that – as long as one understands the composition of what is reported – our reader is intelligent enough to take the numbers most relevant to him or her for individual purposes. We take the time to explain what we have included and what has been excluded in our report. We include those assets on IFA platforms only.

Some of the numbers are our estimates only where AUA is not publicly reported. For years now the platform market has suffered from unrealistic projections from hyper consultants and we will unashamedly err on the side of conservative estimates where data is not available. Newer platforms are understandable coy about reporting AUA and it can take a long time from an IFA deciding to use a platform to actually transitioning assets over. We estimated a number for Novia in the report as no AUA has hitherto been made public or disclosed to us. They contacted us this morning to confirm that they in fact had the much bigger figure of £140m as at Sep 30 with ongoing growth. So congratulations to them, thanks for sharing that data and we’ll put a footnote in the report to this effect.

Let me turn to my friend Zeno, at which point our beloved nerdy mathematician readers will be thinking I am finally going to say something interesting. Zeno’s paradox is a very complex way of talking about the tortoise and the hare – if the tortoise has a headstart, the hare will never catch him even though he’s faster because by the time the hare gets to point A, the tortoise has got to point B and so on - so the hare can never theoretically catch up.(Oh alright actuaries – you try explaining Zeno in a sentence!) My point here is that the bigger platforms – let’s take the top three – grew at rates between 15-25% for the quarter. Although the smaller guys are proportionately biting at their heels, in real terms it’s likely to take years and years for anyone to catch up. Now, with this in mind, should the larger platforms continue to move into DC (Fidelity), acquire other platforms (Fidelity reportedly bought Frankfurter Fondsbank in Germany very recently), attack the institutional platform market (Cofunds) or indeed take an RDR-induced decision to heavily target the restricted advice/sales market or push down the B2C/direct sales line, then it is hard to see how they will be challenged in terms of actual scale over the medium term.

That notwithstanding, smaller platforms are holding their own with some impressive gains and I think it entirely likely that a successful niche market for those platforms purely servicing the HNW and independent advice markets will continue. Let’s not forget that it’s the direct cost line that is The Beast for platforms and Beauty in terms of revenue (obviously a factor of AUA) is only skin deep if the costs are out of control. An article from smaller player Avalon on this week’s homepage makes the case for smaller providers.

Back to our research which includes a quarterly technical update from Technical Connections’ Tony Wickenden who discusses the effective 60% tax rate of the future. Another “Zeno’s paradox” this morning in our household was whether to bother getting up and going to work. If 60% goes on tax, 20% and growing goes on ‘orrible children and a million % goes on a mortgage, wouldn’t we be better off on benefits or in bed? But here we are.

Finally before I let you escape for the weekend – a contact at the FSA has asked The Platforum what we think about their open question to the industry about whether new/different platform regulation is needed. Add your voice to our new poll where at time of writing 56% of you are saying yes. Poll responses are anonymous.

Over and out. Have a great weekend.
Holly