Clients of advice firms who run in-house bespoke platforms are paying the most for the privilege, according to NextWealth.
According to NextWealth’s Adviser Tech Stack, bespoke platforms cost clients 28 bps, compared with 24bps for branded portals and outsourced bespoke platforms and 23bps for unbranded platforms.
Heather Hopkins, managing director of NextWealth, said there was strong appetite among adviser firms to launch their own platform but in practice, few firms are able to offer the platform at a lower cost than average while also earning a profit for the firm.
Around one in 14 (7%) firms currently operate an in-house bespoke platform, while almost a fifth (18%) intend to launch one within the next three years. This trend was particularly noticeable among larger firms, with a third (33%) of firms with £1 billion or more claiming they will have achieved this within three years.
Hopkins said: “The key drivers for change include a desire to boost operational efficiencies, improve the client experience and exert more control over price and capture margin. The reality is that even with firms that have the scale and appetite to launch their own platforms, ultimately it comes at a higher cost to clients. This could prove to be the nail in the coffin for many firms’ ambitions to take this service in-house.”
