Advice firms look to set up own platforms

24 July 2021

More than four in 10 advice firms are considering operating a platform of their own instead of using or white-labelling a third-party platform.

New research from Seccl, the Octopus-owned platform technology provider, found that 44% of advisers are considering platform ownership. It showed that a third (33%) of firms have given the idea some consideration while a further 11% have given it a lot of thought.

The leading reasons behind this trend were operational efficiency (35%) and owning customer relationships more fully (34%).

The research, conducted by the lang cat, also highlighted advisers’ perceived lack of control over poor customer service, with only 2% of firms feeling fully in control of their clients’ platform experience. The vast majority of firms (89%) believe clients hold them at least partially responsible for the service they receive from a platform.

Over 40% of advisers said they often have to change the way they do business to fit around the processes of their platform.

Sam Handfield-Jones, co-CEO of Seccl, said: “This research shows that nearly all firms in our industry feel that their clients hold them responsible for a platform service that they don’t feel in control of. This is a big deal and, in our view, underlines exactly why we’re seeing more advisers and investment managers looking to take control of their destiny by operating a platform of their own.

“Historically, the decision to launch a platform has only really been open to the very largest firms or national networks – those with many billions of assets and large in-house platform admin teams. But technology means that smaller firms can now look get a piece of the platform action. And, as this research shows, a growing number now are.”

Unlike white-labelling, where firms can brand and potentially influence the pricing or terms through which a platform is provided, advisers or discretionary fund managers who choose to operate their own platform will take full ownership of the platform experience.

Mark Polson, principal at the lang cat, commented: “Clearly operating a platform won’t be right for many firms, but 40% is a chunky minority of the market that’s looking into it.

“Big shifts in our sector don’t come all at once, and I suspect twenty odd years ago we’d have seen a similar proportion of firms beginning to consider using a platform for the first time. It certainly feels like we’re seeing a new category forming which allows firms to take greater control of the platform experience.”

Professional Paraplanner