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Should an advice business white label its platform?

Should an advice business white label its platform?
(Eva Elijas/Pexels)

For a financial adviser, perhaps the most stressful parts of any working day are the segments over which he or she has the least control.

This can revolve around the parts of the business that are outsourced, including the platform and associated services and the investment management. 

Platforms have been a particular source of stress for advisers in recent years, with high-profile re-platforming disasters at a couple of businesses, which has prompted many advice companies to ponder whether or not to 'white label' a platform solution. 

White labelling refers to a product or service that has been made by one company but sold by another. White label products are purchased by the latter company without branding, that way the purchaser can customise the product with their own branding, allowing customers to associate the product or service with them. 

Chris Law, UK sales manager at Praemium, a company which offers a range of white labelling services, says many advisers approach him to explore the possibility of white labelling, “but then realise how complex it can be, how much work they have to do, and decide it is not for them. But there are a lot of options.” 

Ola Abdul, chief executive at Fundment, which provides outsourcing services to advice businesses, says: “We separate white labelling out from the approach of ‘adviser as a platform’, we think they are very separate things, although we do both.”

Mark Polson, principal at consultancy the Lang Cat, says the term white labelling is something of a misnomer as there are a wide variety of outsourcing options available.

How deep do you want to go?

The simplest of these, and a service offered by most providers, is placing the advice company's branding and logo on the website.

Law says the next level up is “for all communication” the client receives, including the application form of new clients, to be branded and carry the advice company's logo. 

Then come the slightly more involved options, where the choices revolve around how much regulatory and reporting responsibility an adviser wishes to take.

Polson says: “The first question to ask as an advice firm considering doing this is, how deep do you want to go? You can go into it up to your toes, which might be the simple branding, up to your ankles, up to your knees or, indeed, up to your waist.

"One of the options is to outsource in the sense that the regulatory and compliance functions are with the platform, not the advice firm. The advice firm effectively gives a strategic commitment to the technology provider in exchange for that.

"Then there is the 'up to your chest option', which involves the advice firm taking on the responsibility for the regulatory and compliance. This is the Hubwise and Seccl approach.”