Interesting news this week about Cofunds using Barclays Stockbrokers to add listed securities to their proposition. A good step forward. Listed securities have typically been poorly integrated onto platforms with a mutual fund background and the devil can be in the detail – settlement, inclusion in model portfolios and rebalancing tools etc We look forward to seeing the outcome.

We’ve been spending lots more time with stockbrokers of late who, in turn, are waking up to the “delights” of the fund universe. Our 2012 Direct To Consumer platform research is with the designers about to go to print – and we have identified XO stockbrokers, IFA-brand platforms and fund manager platforms as the leading three models of this £73bn direct market. We think these categorisations will be defunct in three years’ time and we’ll simply see direct platforms – they will all be “discount brokers”, “fund platforms” and “stockbrokers” by necessity – or they won’t be around.

Furthermore, advisers will no longer see direct platforms as a threat – but as an integrated part of their business. Most adviser platforms are ramping up XO capability for their advisers to offer clients and this makes perfect sense. 57% of our research sample of active private investors told us that they sometimes seek advice, they sometimes don’t. Channel that! Many of the direct platforms we interviewed think that >20% of their users have a financial adviser. As we’ve said before, these worlds are colliding.

Finally, as retail direct platforms converge with retail advised platforms, we would like to introduce you to a new friend and that is the institutional platform. We have been somewhat lazily trying to avoid introducing another category into a confusing market but we can’t any longer. These are the platforms which won’t provide an “off-the-shelf” solution to Joe Bloggs BUT will sell building blocks to large distributors and institutions. AJ Bell Securities Services, Allfunds Bank, Cofunds Institutional , IFDL (Ascentric’s engine), Pershing, SEI, TD Waterhouse Corporate Services – they all play in this space and we estimate this institutional platform market stands at about £48bn today.

This institutional baby’s gonna grow this year as more big distributors tell the retail platforms they don’t want their tools, websites and gizmos – they want a cheap transaction and custody solution. In Europe, the Italian platform market is the most institutional with global giants such as State Street, BNP Paribas and Societe Generale providing highly institutional platform and paying agent services for large clients at 2-6bps with some flat transaction fees.

That’s OK in a bank-led market. Some of the UK’s IFAs run very different models and really do need strong retail platforms.

We start 2012 with circa £73bn in D2C platforms and £170bn total in adviser platforms. If you strip out the institutional platforms from the total adviser platform figure it recalibrates to about only £122bn in retail adviser platforms.

73:122:48. We think the mix will look quite different in Q1 2013 and this, my friends, is the number at the heart of strategic deliberations for many. “What do I think about the 73:122:48 mix and what am I going to do about it?” Simples.

As someone who dislikes definitions and numbers I have exhausted myself. Off for a slice of restorative chocolate cake before hitting the dizzy heights of Kentish Town City Farm with rugrats to see what the sheep think.

Have a lovely weekend
Holly