As first revealed with Money Marketing, Parmenion’s CEO Martin Jennings shares his biggest platform predictions for 2025.
Reflecting on last year’s trends and drawing upon his extensive experience, Martin takes us through eight key predictions for the platform industry as we continue into the new year.
1. The flight to quality will continue
According to the latest Lang Cat figures, net flows onto advised platforms rose 70% year-on-year in the third quarter of 2024. The platform market looks set to return to improving and continued inflows in 2025.
What’s most pleasing is the clear evidence more advisers are entrusting their clients’ money with those providers better known for quality of service.
“Shifts in market share throughout 2024 show a move towards those regarded for better service – and about time too”
Shifts in market share throughout 2024 show a definite move towards those regarded for better service – and about time too. Expect this to continue.
Our own research into the impact of poor platform service reported a big jump in the number of advisers changing platforms due to poor service – from 36% in 2023 to 45% in 2024. I predict this to increase to well over 50% in 2025.
2. Transfer frustrations persist
With an eyewatering 95% of the advice profession having to apologise to clients on behalf of their providers in the last year (up from 2023 – and that’s a disgrace), many more advisers will look to move assets to a platform that provides the service they and their clients deserve.
The only real barrier to higher numbers of advisers changing platforms is the current state of industry transfers. 89% of advisers have a negative gut reaction to transferring their clients.
“We’re still seeing 76% of advisers preferring to move their clients in cash, rather than in-specie, which is frankly unacceptable”
We’re still seeing 76% of advisers preferring to move their clients in cash, rather than in-specie, which is frankly unacceptable.
I would love to predict that this will change and all participants in the transfer process (custody platforms, asset managers, wrapper providers) step up to the plate and integrate electronically, allowing simple in-specie movement of assets and improved customer outcomes.
Unfortunately, I fear those putting unnecessary barriers to exit won’t change their ways in the coming 12 months.
3. Investing is back
When it comes to the economy, the consensus is that we’ll see interest rate cuts, which is typically good for investing.
With UK money market funds attracting £2bn year-to-date (~£4.4bn in 2023), November saw a marked slowdown (£131m) as investor appetite for bonds and equities improved.
“According to Calastone, equity funds saw their first positive inflows in 42 months”
According to Calastone, equity funds saw their first positive inflows in 42 months. With further falls in interest rates, investors will want to see their money work harder.
4. More AI talk than AI action
We’ve heard a lot about AI in 2024 and it will continue to dominate event agendas in 2025, but I predict any real step change in adviser automation won’t pull through in 2025.
“AI impact on adviser productivity is unlikely to be felt until at least 2026 and beyond”
The hard facts are that it takes on average 6.7 hours to complete a suitability report and this has remained static for the last five years. The technology is evolving rapidly but still has a way to mature, so impact on adviser productivity is unlikely to be felt until at least 2026 and beyond.
5. Keep on consolidating
Expect a greater focus on consolidation as pressures on growth and delivering investor returns mount. With refinancing and the entrance of new private capital, we should expect to see a continued trend of M&A.
However, there will be a key difference. Firms will be looking to acquire quality businesses and not simply aggregate assets. The focus will be on true consolidation, aggregation becoming less and less appealing.
“I predict only quality firms will attract good valuations”
The UK advice industry is seen by private capital as a great place to invest due to the fragmentation of the industry and an ability to roll-up and achieve scale, fast. However, I predict only quality firms will attract good valuations.
We probably won’t see the same drop in the number of advice firms as we did in 2024 (8% down), but I do expect to see the numbers come down a bit.
6. Bring on the adviser tech
This may not hit the market in 2025, but we will see a number of traditional custody platforms moving into the adviser tech stack space.
“With greater demand for their services, you’ll see a number of new strategic partnerships hit in the market”
Advisers continue to feel let down by their back office, and with the new entrants maturing, I predict we’ll see a number of adviser firms adopting these new technologies.
With greater demand for their services, you’ll see a number of new strategic partnerships hit in the market and advisers will feel more comfortable about making a change. This is a long game, though – benefit realisation probably won’t be felt till 2026 or beyond.
7. No Nirvana in adviser as platform
Scepticism for ‘adviser as platform’ will continue and grow among the majority of adviser firms, as the realities of the required governance and regulatory obligations are better understood.
“Unless you are a path to more than £3/4bn of assets on an inhouse platform, then it’s probably wise to steer clear”
Unless you are a path to more than £3/4bn of assets on an inhouse platform and have the management bandwidth to focus on this part of the value chain, then it’s probably wise to steer clear.
KMPG issued some excellent research on this topic in 2024, clearly laying out the opportunity and the risks. Advisers appear to be waking up to the reality that Nirvana’s not to be found in that direction.
8. Consumer Duty continues to bite
As the regulator’s scrutiny of the Consumer Duty and fair value intensifies, we’ll see a number of players struggle to meet the new benchmark.
The opportunity for big propositional transformation programmes may be limited in some platforms. The impact will be a wave of exits and a number of platforms looking for new investors in 2025. Expect loads of journalist speculation and gossip columns rife with who is buying who in 2025!
Read the Money Marketing article here.
This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
