Six in 10 (61 per cent) financial advisers said they anticipate investment platform consolidation to accelerate over the next three years, rising to three-quarters (75 per cent) of firms managing more than £500m, Scottish Widows’ Investor Confidence Barometer has revealed.

Scottish Widows attributed this market consolidation to the pressure from rising costs, regulatory change, and higher expectations from advisers and clients.

According to the barometer, most advisers (92 per cent) said platform competition was important for client outcomes, with 72 per cent also valuing niche providers, but 35 per cent were concerned about the level of platform consolidation.

Furthermore, nearly two-thirds (62 per cent) said a platform collapse would affect their business, while more than half (52 per cent) were worried about growing private equity ownership of platforms.

Scottish Widows intermediary wealth director, Jenny Davidson, commented: “Competition is good for advisers and clients. It keeps the market vibrant, driving innovation and a focus on good outcomes and value.

"However, the market is currently suffering from pressure on revenues and increasing costs from managing regulatory change and investing to meet the increasing expectations of advisers and their clients. Platform consolidation feels inevitable.

“The risk for advisers is their platform of choice becoming collateral damage, leading to a constrained and less competitive sector.

"This further emphasises the importance of picking a platform that is financially strong and committed to a future in the market, with a clear roadmap for growth.”

Davidson explained that as advisers continue to take on more clients, there will be mounting pressure on platforms to “demonstrate their robustness and ability to meet the extra demand”.

“Stability and the ability to continually invest in best-class experience will stand out as key pillars for supporting the next generation of advice businesses," she concluded.

Scottish Widows’ Investor Confidence Barometer provided a snapshot of how financial advisers, paraplanners, advised investors, and non-advised investors felt about emerging industry issues.

The firm recently published barometer data in which advisers said they would step up planning ahead of the 2027 inheritance tax pension changes.

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