A guided future awaits Europe’s platforms
Guided architecture and increased support for cross-border distribution look increasingly likely, but strong barriers remain according to those in the field.
UK-based consultancy The Platforum recently published a study, European Platform Guide: A Single Market… Or Different Planets?, looking into European fund platforms in the UK, France, Germany, Italy and Spain.
Not surprisingly, perhaps, it found that the platform market across Europe remains fragmented. Each market currently has its own fund ‘supermarkets’, ‘platforms’ or other types of services that best suit local conditions.
Far less prevalent are solutions that work across borders – although this is something that is slowly coming to be, according to Holly Mackay (pictured), managing director at The Platforum.
She uses the UK as an example. The country’s platform landscape historically developed to support independent financial advisers (IFAs). Therefore the platforms are quite complex as they offer trading, tax wrappers, support services and so on.
In Germany, there are also platforms supporting IFAs, although the banks have a much stronger role in distribution than they do in the UK.
Meeting in the middle
But the picture is rather different for institutional platforms. In Italy, for instance, advisers tend to work for banks. This means the banks put together the platforms, which are supported behind the scenes by security services businesses, from the likes of State Street, RBC Dexia and Société Général Security Services.
Therefore, the biggest difference remains that whereas the largest UK IFAs have tended to adopt others’ platforms, Italian and Spanish IFAs have tended to build their own.
But amid these differences, there are some burgeoning similarities, not least the shift towards guided architecture. Mackay says: “We are seeing that in the UK because IFAs are moving towards a centralised investment proposition.”
She points to The Platforum’s recent quarterly survey, which found that 45% of UK advisers said they used model portfolios, 27% said they were using multi-manager portfolios, and 5% were using third-party discretionary fund managers.