The prices financial institutions can charge for investment platforms are moving permanently lower, according to Tria Investment Partners.
"It's clear that the days of the platform component of the value chain earning 50-70 basis points are over, for new business at least," Tria managing partner Andrew Baker said.
"While some speculate about platforms being given away for nothing, it's more likely that we are heading for a new range of 10-40 basis points, with a median of 25-30 basis points. [But] we are not there yet."
The role platforms play has become less important due to regulatory change, stronger competition, and technological improvements.
The Future of Financial Advice (FOFA) reforms in particular have made platforms less relevant.
"FOFA forces the unbundling of product fees and commissions, so prices of go-forward retail products have gapped down," Baker said.
"FOFA has also hit the independent planner channel hard, and platforms serving that channel have been repricing aggressively."
Baker pointed to price reductions at Macquarie Consolidator, Asgard, IOOF and, more recently, MLC's Masterkey Fundamentals.
The repricing has taken the form of reductions across a tiered asset under management scale, dollar price caps and rebates or family based pricing.
The start date of 1 July 2012 for FOFA has also put pressure behind repricing efforts, as any business that is won before this date will be grandfathered under the existing rules.
"FOFA effectively grandfathers existing retail business and discourages planners from moving the business around after that date," he said.
"It may create a lock-in effect, which means that higher margin existing business only gradually runs off.
"With many planners reviewing which platforms they want to have their retail business located on, it's a rare and limited opportunity for platforms to win chunks of market share from competitors."
