“Perhaps you’re not happy with the service offered by traditional, paper-heavy platforms, particularly if it reflects badly on your own business, and want to improve the client experience by taking on the administration yourself.
“Your rationale might be efficiency-driven, with you hoping to build a more efficient, sustainable and affordable business by integrating your platform with your existing business processes, rather than forcing them to fit around a platform.”
Under a platform ownership model, an advice firm (or discretionary fund manager) therefore owns the client relationship in full, Pike explains. “They will likely rely on a third party for the core platform infrastructure, typically custody, client money and the technology to power the trading and settlement of investments.
“But they will now be responsible for the platform administration, under a separate agreement that they sign directly with the client. If they wish to change the tech ‘plumbing’ on which their platform is built, they can do so at any time without any involvement from the client, giving them full ownership of the technology stack and the client relationship.
“As the term suggests, when an advice firm or DFM chooses to operate their own platform, they will be operationally responsible for the day-to-day administration of the platform services. In other words, it brings another, more total level of control to the overall platform experience.”
Take-up might not be guaranteed
However, there are several things that firms need to get right if they plan to launch their own platform, says Hopkins at NextWealth.
Beyond thorough due diligence and a needs assessment, which are to be expected, she says one of the most overlooked aspects is advisers and paraplanners adopting the platform itself, with the decision to launch a platform often made centrally at a firm’s head office.
Ben Raven, managing director at Tavistock Asset Management, which operates its own platform, says: “While we do not mandate any of our independent advisers to use the Tavistock Platform, the organic take up contributes towards the overall profitability of the Tavistock Group and the value we look to provide to our shareholders.”
Northrop at Alpha cites another advice firm that he says has been able to encourage all of its advisers to place clients’ assets onto the firm’s own platform.
“They’ve been able to… demonstrate to them why their own platform is suitable and best for all of their clients, and they’ve been able to get them to use the platform. So that’s almost a key consideration and thing that firms need to get right.
“Whereas other firms, perhaps firms that have scaled through lots of previous acquisitions, will have lots of different advisers who have used different platforms in the market. And trying to get them to use the in-house platform for their clients, that’s the challenging bit.
