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UK advisers concerned about platform consolidation, says study

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Advisers using the Cofunds platform may have concerns about service levels dropping in the wake of the announcement that Legal & General is selling the platform to Aegon for GBP140 million, according to a study.

A CoreData Research survey of nearly 1,000 financial advisers carried out in June reveals that the primary concern of advisers across the industry around platform consolidation is the possibility of reduced levels of service post-merger. This was cited by over two-thirds (67 per cent) of respondents — equating to about 16,000 advisers in the UK.
 
Furthermore, the research indicates that any resulting lower quality of service would see a substantial majority of 83 per cent — or 19,800 advisers — move assets to another platform.
 
The CoreData report highlights high levels of adviser concern around platform M&A as a whole, with nearly two thirds (62 per cent) of advisers worried about their main platform being impacted by consolidation.
 
The CoreData findings also suggest that adviser business on platforms could stall should the Cofunds deal trigger a prolonged period of platform consolidation. Over half (54 per cent) of advisers say they will stop registering new assets in the event of their main platform undergoing a deal until due diligence is carried out on the new entity.
 
“Platforms are finding it more difficult to achieve scale amid the demands of regulatory compliance, margin pressures and digital disruption,” says Will Roberts, senior consultant at CoreData Research. “The economic fundamentals would therefore suggest that the Cofunds deal could be followed by a period of prolonged platform consolidation at some stage in the near future. And our research indicates this would constitute a significant area of concern for advisers.” 

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