A third of large advice firms are set to become platform operators over the next three years, according to a report from NextWealth.
Data from NextWealth’s The Great Platform Shake Out report showed growing pressure upon advisers to adopt an adviser-as-platform model, with NextWealth predicting that private equity-backed advisers are most likely to build and run their own platform in the near future.
Heather Hopkins, managing director of NextWealth, said: “Competition is fierce among platforms at the moment. Incumbent players are being pressured to modernise and evolve their propositions to suit a pressing need for flexibility and digitisation.
“Particular pressure is being felt from the adviser segment we’ve labelled Investment Outsourcers. These firms represent 20% of the existing adviser market but are growing rapidly through PE-backed acquisition. They are most likely to have plans to build their own platform – we predict about a third of them will have achieved this within the next three years.”
Hopkins added: “While we expect a third of these larger firms to adopt the adviser-as-platform model, we think they will maintain a multi-platform strategy to support a wide range of customer needs.”
The report showed a shift in ambition among firms to launch in-house platforms, following a dip in interest in 2021. In NextWealth’s first report in 2021, over half of advisers with assets of £250 million or more said they would build their own platform within three years, but this figure dropped to 18% later that year.
However, its latest report has shown a bounce-back in their intention to build a platform, driven by advisers having more free time to focus on technology and operations and a desire to gain greater control and oversight of client outcomes to meet the Consumer Duty requirements.
NextWealth said existing third-party platforms will also need to evolve and modernise by developing digital propositions and offering more services to advisers including supporting regulatory compliance and operational efficiency.
The lang cat’s State Of The Adviser Nation report, also published this week, found 66% of advice firms it surveyed were not considering operating their own platform, or had done so and discounted it; 24% said they might consider it in the future; while just 4.2% said they were actively considering, and 5.4% said they had already gone down the own platform path.
