Are bolt-on services the future for investment platforms?

NextWealth consulting director Emma Napier cites a report by the research and consultancy practice that identified a growing trend in the ‘adviser as a platform’ model for larger advice or discretionary fund management businesses, as well as the emergence of ‘platform-plus’ and ‘white label-plus’ models.

“Data within our forthcoming report on advisers’ back offices captures evidence that, while back-office providers are looking to evolve and ‘do more’, so are the traditional platform providers,” says Napier.

“In the case of Transact, Fidelity and M&G Wealth, they have all been working hard to enhance the adviser experience by bolting on additional services surrounding the platform.

“With the consumer duty’s ‘value for money’ still fresh, providers across the value chain have been working hard to quantify their individual value. This is evidenced by most platform providers looking to secure themselves firmly within the adviser/client journey."

An efficient firm can potentially offer more competitive rates, making financial advisory services more accessible and cost effective.David Scholes, FE Fundinfo

Napier continues: “Client onboarding, cash flow tools and integration hubs aim to improve the connectivity and efficiency for the advice professional during the advice journey process.

“If the traditional platforms get it right, and indeed provide additional functionality, which is beneficial and relevant to the financial advice journey and is deemed ‘value for money’ by the adviser, this can only be a good outcome resulting from the inward-looking focus that the consumer duty is trying to achieve.”

But there is still progress to be made, says Napier. “As our financial adviser business benchmarks report clarified, there is still a long way to go if, on average, it takes an advice professional 4.6 hours to prepare for an annual review meeting.

“While the average platform fee has fallen to 25bps (from 25.9 bps in 2022) we eagerly wait and watch traditional platform providers look to do more and continue to invest in bolt-on support services, which hope to remove friction currently sitting in the advice process.”

Jason Dewar, head of research at Dynamic Planner, which integrates with back offices and platforms, also highlights how it was not so long ago that compiling a review report for a client could take days as the adviser or paraplanner waited for the platform or provider to email the information requested.

According to Dewar, Dynamic Planner’s integrations enables advisers to compile a full review report in 10 minutes, providing an analysis of portfolio performance, asset classes held and portfolio risk against Dynamic Planner’s benchmark, and indicates whether the client is on track to meet their goals.