“So how do you get them to use it for new clients? How do you get them to move the clients who are already on other platforms onto this in-house platform? That’s the challenge.
“So there’s this bit where I think firms that are already well-integrated, and are already aligned to one vision in terms of what they’re trying to do, they’ll be more successful at adopting this, versus firms that are more disparate and a bit all over the place; trying to get them to use one platform is really hard.”
Are you equipped to be a platform operator?
Another factor that firms should consider is resourcing, says NextWealth’s Hopkins. “Only 1 per cent of employees of financial advice firms work in IT. Small firms don't need dedicated IT support, but big firms planning to run a platform do.
“IT and data analytics experts will be needed to build integrations and to get the reporting and [management information] required to manage the business.
“Firms will also need client service staff to handle enquiries. This can work really well in the right business, but firms often underestimate the resource required.”
Pike at Seccl likewise says firms may need to hire new staff to resource a new platform, especially if it is being licensed to other advice firms. But he adds that some firms have been able to effectively run their own platform with their existing administrative team.
“It will also bring additional compliance and governance implications,” Pike says. “You’ll be responsible for new tasks in the eyes of the regulator, [which] could well mean you need additional permissions; for example the permission to arrange safeguarding and administration of assets. Though if you’re already a DFM, you might well have these already.”
Knock-on effects on off-the-shelf users
Even for firms that are not looking to launch and operate their own platform, the possibility to do so is putting competitive pressure on off-the-shelf providers.
“What we’ve been seeing platforms do is, one: some are looking to develop their own white-label platform capability, to compete head on with the likes of Seccl and Hubwise and say, ‘Look, we could offer this to you as an alternative solution than just our retail platform that we’ve got on the shelf,” says Northrop.
But he adds that with most of the market being powered by technology provider FNZ, it becomes difficult for a platform provider to spin off a white label.
“You end up with too many different levels in the hierarchy. So you’d have the advice firm operating the platform, you’d have [the platform provider] provisioning that platform, and then you’d have FNZ providing the technology.
