According to Navigant, the full potential of wrap platforms has yet to be realised. “Five years ago, forecasts suggested that the industry would be administering closer to £150 billion of assets by now.  It’s taken time for the market to understand the role that platforms can play,” said Andrew Stewart, leader of Navigant’s Financial Services Europe practice.

“Advisors have accelerated their use of platforms significantly in the past three years, with some organisations developing their own internal platforms,” he said.

Navigant believes that a boom in the assets held on platforms is supported by a combination of ongoing investment in collectives, combined with the transfer of assets from investment bonds and existing pension schemes.

While there is huge potential for growth there are however challenges for the UK platform industry to overcome, as the consultancy firm points out.

Firstly, significant investment - estimated to be around £600 million to date - has been necessary to deliver wrap platforms, and further investment will be required to maintain competitiveness. This, coupled with low margins, means that much of the industry is still making a loss and may require long timescales to deliver expected returns.

Secondly, Navigant points out that the industry cannot support a large number of platforms and so we can expect to see consolidation and many providers exiting in the coming years.

Although the industry faces challenges ahead, Mr Stewart believes there is considerable scope for platforms to gain market share: he estimates that there is £350 billion in pension assets and £200 billion in investment bonds that could be transferred into schemes offered by platforms.

“We estimate that the combination of ongoing success in attracting collectives plus greater penetration of pension and investment bond assets could help platforms grow to circa £300 billion within the next five years,” he said.