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A flurry of recent consolidation in the platform market raises questions over the power this new era of mega-platforms could wield over fund managers. KRISTEN PAECH reports. In the 1990s, US research firm Cerulli Associates famously predicted there would only be five major platforms in the Australian market by 2004. While this turned out to be premature, a bout of consolidation over the last six months has significantly boosted the market share of those who’ve gone on the offensive, and increased the dominance of the major market players.

Last year’s merger between Westpac and St George, which brought the BT Wrap and Asgard platforms together under the Westpac umbrella, marked the start of what is not so much a trend but a development triggered by external forces. In April, the Australian Wealth Management and IOOF Holdings merger, including the Skandia platform business recently purchased by IOOF from Old Mutual Group, was given the green light by shareholders. And more recently, NAB acquired Aviva Australia’s wealth management business, counting its life insurance operations and investment platform, Navigator, for $825 million.

The derailment of the sharemarket has seen platforms lose nearly one quarter of their funds under management over the past year; a tough business environment for providers that rely on asset-based fees. According to statistics from Plan for Life Actuaries, the total masterfund market, comprising platforms, wraps and master trusts, fell 19.6 per cent over the year to 31 March, 2009 to stand at $328 billion. Inflows of $89.3 billion were well down on the previous year’s $148.2 billion, while outflows of $75.2 billion were also down on the $104.7 billion recorded in the year to March 2008. Five companies hold more than $10 billion in platform funds under management, led by Colonial First State ($32.5 billion) and AMP Financial Services ($27.3 billion), as at July 1 this year.

And one quarter of Australian financial planners now use the combined BT-Asgard platforms as their main platform, according to Investment Trends. Investment Trends’ October 2008 Planner Technology Report, which surveys 1400 advisers, put Aviva in third position (behind BT and Asgard), based on the number of adviser relationships, and MLC in sixth position. But post-acquisition, Mark Johnston, principal of Investment Trends, says the combined MLC-Navigator platforms should poll second or third overall, depending on the number of adviser relationships MLC manages to retain.

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