Downward fee pressure in the wealth management industry is turning the administration platform market into "a race to the bottom", according to new research on the sector.UBS says platform fee margins on contemporary products could fall from the current average of 44 basis points to 30 bps over the next five years - a reduction of 8 per cent a year over that period.Legacy products have higher margins but there will be a significant drop in the proportion of these products in the overall product mix over the next few years. Churn from legacy will increase as grandfathering of commissions is abolished.Accounting for both contemporary and legacy products, the average platform margin has fallen from 80 bps to 57 bps over the past four years. This period includes the transition of default superannuation to low-cost MySuper products.UBS expects the average margin to fall to 35 bps over the next five years."Major platforms cannot take costs out quickly enough to preserve profits. A 40 per cent cut necessary to preserve profits appears a step too far," UBS says.It says platform profits for the big wealth managers could fall by as much as 30 per cent over the next five years.UBS says: "As the foundations of vertical integration give way, major platforms are shedding funds under administration at an increasing rate, as advisers turn to more contemporary and independent platform offerings. Successive recent admin fee cuts from the majors are, in our view, a band-aid solution. They may ease outflows but could ultimately exacerbate revenue pressures."UBS has based its research on an analysis of A$660 billion of funds on administration platforms, which it says represents 81 per cent of total platform funds under administration.Of the $660 billion, 61 per cent is held on bank platforms, such as BT Panorama, 14 per cent is on AMP platforms and 4 per cent with IOOF. Specialist providers have a 5 per cent share.While the specialists are small, there is a shift in market share to providers such as Netwealth and HUB 24. UBS says one of the reasons these platforms are growing is that they are prepared to discount off their rate cards.The big platform providers have had to respond. In July last year, BT cut fees on its flagship platform Panorama. Administration fees were cut by between 16 per cent and 38 per cent, depending on the account balance.MLC, Colonial First State and AMP have followed with similar changes. AMP has cut platform fees twice in the past year, in a bid to hold share. But UBS estimates that its revenue will fall over the next few years.UBS says: "Recent platform administration price reductions have seen a shift toward a higher proportion of fixed fees. This is consistent with recent views from the Productivity Commission that super administration fees should be mostly fixed fee based and relate largely to cost recovery."Spitfire, a recent specialist platform provider start-up, has indicated that it intends to shortly launch a product with a fixed admin fee of $495