22 Nov Vertical integration

Last week we published the quarterly Platform Report, which attracted much attention.  Total industry assets now stand at £267bn, and although it was the quietest quarter of the year, gross and net flows were pretty robust at £17bn and £8.9bn.  (Download press release here and 60-second reviews here).

Market sentiment is driving sales, which is good for the platform industry, but RDR has also been a boon for platforms.  The Distribution report is due out early next week, but we can reveal that platform market share jumped yet again and now stands at over 51% — a significant change considering their market share of 41% in Q4 2012.

Fresh off the press yesterday was the news that the Zurich platform has assets under administration of just under £7bn, an increase of £2.4bn since the start of the year.  Aided by auto-enrolment, the platform’s workplace savings proposition has been particularly successful and is probably where the bulk of AUA sits (Zurich didn’t break down AUA). Its adviser proposition, the Zurich Intermediary Platform (ZIP), has also gained traction this year helped by Openwork (its own adviser network)  and other groups and networks such as Lighthouse, Simply Biz, Bellpenny, and Best Practice.

Zurich may still be a small platform but through Openwork, it has valuable access to distribution.  Other groups are taking a leaf out of their book and integrating vertically.  Russell Investments is the latest to announce such a move with the news that it is to acquire the On-Line Partnership, the parent company of the In-Partnership and Whitechurch networks with a combined total of +600 advisers.  In return, the networks will get Russell’s investment and fund selection expertise.  And a range of funds and model portfolios.   Standard Lie is no stranger to vertical integration, but it recently announced that Standard Life Wealth is to be fully integrated into Standard Life Investments on 1st January 2014. Such closer cooperation characterises how distribution is increasingly seen as critical to asset management success. We expect much more vertical integration in the next few years.

Have a great weekend.

Bella