The growth of fund platforms has led to a near doubling in five years of the number of fund assets sold directly to investors rather than via financial advisers in the United States.
Fund platforms, which emerged as a low-cost distribution service for relatively sophisticated retail clients, are transforming into comprehensive advice providers, says Cerulli Associates, a research firm that produced the finding. This means increased competition to the traditional advisory model.
“Formerly considered the tool for do-it-yourself investors, [fund platforms] now provide a suite of services to investors across wealth and service tiers, providing legitimate competition to their traditional advisory peers,” says Roger Stamper, senior analyst at Cerulli.
Cerulli predicts that the direct distribution model will grow in popularity, largely driven by developments in consumer technology.
Fund platforms have also become a more important source of fund sales in Europe in recent years. In the UK, the onset of the retail distribution review (RDR) has given a boost to the platforms by forcing independent financial advisers to be transparent about the costs they charge investors, rather than funding themselves with trail commissions.
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