threesixty Predicts Onset of Platform Price War in 2009

threesixty, the IFA services provider, is predicting that platform providers are slowly marching towards a price war, but that it will not arrive until mid 2009.

Phil Young, Partner at threesixty, said: “Wrap will continue to grow slowly, but steadily within the IFA sector throughout 2008, and during this time we expect the more established fund supermarkets to expand on the breadth of their offerings with additional tax wrappers."

“During this period of gradual change, with newer platforms cautiously growing their distribution, there is likely to be little pressure on price. At a certain point, however, which could be as early as mid 2009, market dynamics will change: a small number of platforms will become dominant; IFA usage will increase; and current differentiators between platforms, such as service levels, quality of administration, usability and functionality, will be less significant as the underlying technology used improves and matures."

According to threesixty, this leaves room for niche players such as discretionary fund managers, or anyone else brave enough to compete on price alone, to enter the market.

Phil Young continues: “A successful new wrap, or one of the major players looking for more market share could easily trigger a platform price war. This threat is important to encourage innovation and competition and to keep the marketplace from stagnating.”