Platforms leaving the market has not scared 7IM into scaling back ambitious investment plans, according to Russell Lancaster, managing director of the firm’s platform business.
Lancaster called M&G’s decision to exit the adviser platform market “brave” and said 7IM was already seeing clients who were using the M&G platform.
He said: “We are talking to clients that were using M&G’s platform.
“It is inevitable with the economies of scale and the investment required for platforms that some will stop trading. M&G made a brave decision not to invest further into their platform.”
Despite this, Lancaster said 7IM would not be looking to pause its multi-million pound investment plan.
He said: “Now is not the time to take the foot off the accelerator.
“We are making a three-year multi-million pound investment into our technology."
Part of this includes putting data into the cloud resulting in a “more resilient scalable platform” and new technology to move people’s assets from one platform to another, which is expected to be rolled out by the end of the year.
Lancaster said this would lead to a 30 per cent increase in efficiency.
He said: “It is quite significant, especially when the regulator has asked for transfer management information. They want to understand how long it takes platforms to complete transfer requests.”
He added: “Our vision is to double assets over five years to a £50bn wealth business with a platform at the heart of it.
‘Outflows will stay elevated’
Lancaster joined 7IM in December 2023 and said the past nine months have been tough for the platform sector.
He said there is still a lot of cash leaving platforms, including through record levels of annuity sales.
“We are predicting outflows will stay elevated for the rest of the year,” said Lancaster.
“We have got a Budget coming up and people are nervous.
"The industry as a whole is quite cautious about spend, but we are not changing our plans for investment.
“Now is the best time to be investing when others are drawing in their developing capacity.”
The firm has just produced its 100-page consumer duty report, the first under the new requirements of the regulations.
Lancaster said the FCA wanted to see a copy of this, he said most platforms were asked to show their reports to the regulator.
“Every adviser would have been through the same process. You’ve got to have a fact based approach - it is a complex challenging process.”
And Lancaster said he thought the desire for advice firms to set up their own platforms was waning too.
“I run a £20bn platform, I know the regulatory complexity,” he said.
“Regulation isn’t going down, it is going up. I would be worried about advisers taking on platform permissions. I think there is a place for it probably at the top end of the market, but for the vast majority of advisers the cost of running a platform would make it uneconomical.”
