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Slew of advisers planning own white-label platforms

Slew of advisers planning own white-label platforms

Almost half of advisers plan to launch their own white-label platform in the next three years, according to research from Nextwealth.

In survey of 218 advisers with assets under management of £250m 47 per cent said they plan to launch a platform, with 8 per cent of these already under way.

Heather Hopkins, managing director of Nextwealth, said: "Our survey with advisers for the report reveals a shift could be on the horizon in the way that financial advisers structure their businesses. 

“The key drivers for change are a desire to boost operational efficiencies, improve the client experience, exert more control over price and capture margin."

She added: "Technology is driving the trend for white-labelled platforms and, with consolidation and private equity investment in financial advice firms on the rise, we are seeing the emergence of advice businesses with the scale - and the appetite - to launch their own platforms."

The main drivers behind the trend towards white label platforms were increased control over price, which has come under pressure recently from lower cost options offered by firms such as Vanguard.

Other reasons included increased ability to capture margins from the platform fee revenues, however in the report Nextwealth highlighted that this could create a potential conflict of interest and comes at a cost (responsibility for oversight and governance of the service).

White label platforms also gave firms more control over the client’s experience, as well as controlling CIP implementation. However, these benefits could also be gained with a single platform provider without incurring the expense and responsibility of an inhouse platform, Nextwealth said.

Compliance has a major role to play for advisers considering setting up a platform, said Russell Facer, CEO of Threesixty Services.

He said: "The platform market is changing rapidly and the report provides welcome context and insight into white labelled propositions."

But he warned: "It's crucial firms considering entering the platform market - either as a platform service provider or using a white label proposition - understand what they are getting into and how these arrangements are structured."

"At the heart of these commercial arrangements lie the investors. The recommendation of a platform solution must be suitable and in clients' best interests."

To help advisers who are considering transitioning, Threesixty has recently published a platform guide, to remind firms of their regulatory obligations when operating in the platform market.

Last year, Ian McKenna, founder of Financial Technology Research Centre and AdviserSoftware.com, told FTAdviser that although advisers are still using platforms for the vast majority of funds invested, an increasing number are also looking for different platform solutions.

"We are seeing more firms looking for a white label platform solutions which can reduce charges to consumers and provide some additional margin to the adviser.

"It is important both these elements are present, the client must benefit as well as the adviser," McKenna said.