After a period of momentum behind adviser-as-platform and Model-b propositions, adoption patterns have now levelled off, says NextWealth.
Its report ‘When the Dust Settles: Platforms After the Shakeout’ found that following the initial shakeout of the market, change is being driven less by headline model shifts and more by how effectively platforms support migration, adviser adoption, data and integration and the operating models of advisers firms at scale.
The research, carried out among 296 financial advice professionals, shows firms report clear wins with Model-b propositions, including onboarding, lean operations and client experience. Modern interfaces and operational efficiencies are also benefits, however, they may require advice firms to accept limitations in breadth or maturity of functionality, NextWealth said. The trade-off in functional gaps means firms are often retaining third-party platforms for clients with more complex needs.
Chanelle Paynter, report author and associate research director at NextWealth, said: “Firms are making deliberate trade-offs, often segmenting by client type or use case. This helps explain why many firms retain third-party platforms alongside new ones, and why a multi-platform strategy is the likely end-state for most large firms rather than wholesale replacement.”
NextWealth said that while the findings show that the adviser platform market is not converging on a single dominant model post-shakeout, they are becoming more intentional, matching platform strategy to firm type and increasingly segmenting by client type.
Paynter explains: “The practical result is a durable matrix of platform roles rather than a single platform decision, where different platforms are selected to do different jobs inside the same firm.
“For third-party platforms, the risk isn’t simply that large firms become platform operators. It is that these firms are tightening platform panels, standardising processes, and becoming more deliberate about where new business flows. Platform ownership is a tool for integration and control of the client journey. It is not, and rarely ever was, a pursuit of margin. The result is a market where multi-platform strategies persist.”
Additionally, Paynter said where firms are looking to launch a platform, expected gains are focused on being able to serve lower value clients.
“Many firms are drawn to model-b not simply to capture more economics, but because they believe it gives them a better chance of solving for efficiency, client experience, and lower value clients. Third-party platforms that can demonstrate a credible answer to these same needs are better placed to retain relationships and compete effectively against the model-b proposition,” she said.
The NextWealth research also reveals the emergence of a new variant of platform model: white-label plus. However, there are marked differences in understanding on what this new model looks like in practice, with NextWealth warning that some interpretations have the potential to raise a regulatory red flag.
Paynter added: “At this stage, white-label plus is an emerging commercial concept rather than an established market model. It remains to be seen whether it develops into a durable proposition or is constrained by regulatory expectations. Any fee arrangement must be proportionate to the work being performed. With Consumer Duty expectations in focus, firms and platforms exploring this model should ensure they can robustly evidence the value being delivered, before regulators ask them to.”
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