Owning platform is 'advisory profession understanding the power it holds'

Owning platform is 'advisory profession understanding the power it holds'

The growing trend in the advice profession of firms operating their own platforms as opposed to using white-label or third party versions, is down to advisers reclaiming control and making use of some emerging opportunities, said Mark Polson.

Speaking at a virtual event this morning (July 22) called 'Advisers Assemble! Why advisers and DFMs are choosing to operate their platform', the Lang Cat principal referred to research by platform technology provider Seccl which found 44 per cent of advisers are considering platform ownership.

He said the main reasons why firms were considering this route were operational efficiency (35 per cent) and owning customer relationships more fully (34 per cent). 

Polson explained that in any other industry, the person or the firm closest to the customer was the winner but in financial services advisers have had an uneasy relationship with providers and other third parties in that they are introducing business to each other.

He said: “When we look at some of the Mifid regulations for example, where adviser firms, wealth managers or financial planners, are classed as distributors - that isn't what planning firms in particular think they do.

“But when you step away from actually financial planning and into the implementation of those plans where you get assets and you place them somewhere - as far as regulation goes that is what you're doing - that doesn't feel great so that owning the customer relationship and kind of stepping into the role that's traditionally been inhabited by providers, that's a fascinating dynamic.”

He added: “[This is] exciting because it comes off the back of a decade of advisers buffing up and it all flows from RDR, and it's about the advisory profession starting to understand the power that it holds.

“That hasn't always been the case in this sector and it has taken quite a long time post RDR for the industry, as distinct from the profession, to start reforming itself. This is one of the ways in which it is doing it, with the adviser's platform.”

Seccl's research, which was conducted by the Lang Cat among 181 advisers between May 19 and June 14, 2021, found nearly 90 per cent of firms felt clients held them responsible for something they were not in control of, at least partially.

But the thing that would most encourage advisers to operate their own platform was to “create operational efficiency”.

New technology is making it easier for advisers to dabble in this market.

Polson said it was not a case that advisers "hate" the platforms they used. 

“It's not the case that everything's broken, but there are certainly inefficiencies that have been baked into the sector, and interestingly a lot of those fall to firm's rather than to the platform's themselves,” he said.

“So, creating a better administrative world is really, really important to firms. 

“One of the things I kind of get into trouble for saying sometimes is that advice firms often aren't really advice firms, they are kind of financial administration firms that also give advice and the reason they are that isn't because they love financial administration and want to do lots of it.