Our research also shows that 56% of the UK IFAs we surveyed consider high charges a key reason to change platform provider and 45% consider the lack of tax wrappers another main reason to change platform. In addition, 80% of respondents expect platform fees to continue to compress over the coming 12 to 24 months and 57% believe that B2B platforms will need to offer more bespoke propositions to remain competitive in the long term.

When it comes to functionality and services, half of the UK IFAs Cerulli surveyed believe that the quality of customer service is a very important feature when selecting platforms and 47% consider advisor functionality very important. However, just 17% of respondents consider business development support a very important characteristic of platforms (see below).

Products and wrappers

The availability of investment products and tax wrappers are the most important parameters to UK IFAs when they select platforms: 71% and 65% of IFA respondents identified these elements respectively as very important factors in platform selection. In addition, 33% consider the availability of model portfolios a very important criterion when selecting the primary platform to use for their clients and 19% consider the availability of DFMs another key element in the selection process.

Cerulli research shows that the use of DFMs and model portfolios has increased in the UK in recent years, with advisors preferring to outsource investment decisions to professional asset managers and focus on business development and client relationships. However, 34% of the UK IFAs we surveyed do not use DFMs for their client portfolios on platforms, although many of those we interviewed expect to increase their use of such players in the future. DFMs’ advantage is that they offer a cost-effective way to allocate money in client portfolios.

Moreover, nearly half (48%) of the IFAs Cerulli surveyed in the UK believe that the ESG fund offerings on platforms are not as developed as they would like. Around a third (33%) of the asset managers we surveyed in the market anticipate high demand for ESG products from IFAs and IWMs over the next 12 to 24 months. Despite the strong growth exchange-traded products have recently experienced across Europe, IFAs are still reluctant to include ETFs in their clients’ portfolios: just 16% often use exchange-traded funds (ETFs). Almost all (90%) of respondents do not use exchange-traded notes (ETNs) at all and 87% do not use shares listed on foreign exchanges. In addition, 85% of respondents do not use exchange-traded commodities (ETCs). However, ETF issuers are confident that investors across Europe will drive ETF growth. More than half (52%) of the ETF issuers Cerulli surveyed in the region agreed that digital fund platforms have been a key driver of ETF sales growth in Europe over the past 12 months, although only 3% strongly agreed.

Overall, three-fifths (60%) of the UK IFAs we surveyed use on platforms unit trusts and open-end investment companies (OEICs) extensively in their clients’ portfolios and another 63% use investment trusts to some extent.

Platforms ranking

Cerulli asked 101 IFAs operating in the UK to provide overall scores of the different B2B platforms operating in the local market. The IFAs we canvassed ranged from smaller players with AUA of less than €20 million (US$20.9 million) as of July 2022 to large players with AUA of more than €1 billion at the same point.