Increasingly, though, it is taken to mean something a little bit more advanced than that; a chance to exert control over more than simply the cosmetic. This might mean changing the pricing, or altering the terms on which the platform services are offered. For want of a better phrase, we might call this approach ‘white label plus’.
It does not, however, alter the legal basis of the relationship. The client will sign a contract with the underlying platform provider, who will continue to perform all the services involved in the delivery and administration of that platform.
Operating your own platform
Both of these ‘white label’ approaches differ from ‘platform ownership’ (or ‘operating your own platform’), for a few reasons.
The first is legal. Under a white label model, the client still signs terms with the third-party platform, no matter how it is branded. Put another way, when it comes to the platform services that they receive, they are the platform’s client, not the adviser’s.
If that platform chooses, for example, to change underlying technology provider against the wishes of the adviser – as can happen following an acquisition – that adviser is powerless to do anything other than recommend a different platform to the client (which would entail a lengthy suitability and re-papering exercise).
But under the ‘platform ownership’ model, the advice firm or DFM owns the client relationship in full. They will likely rely on a third party for the core platform infrastructure – typically custody, client money and the technology to power the trading and settlement of investments – but they will now be responsible for the platform administration, under a separate agreement that they sign directly with the client.
If they wish to change the tech ‘plumbing’ on which their platform is built, they can do so at any time without any involvement from the client – giving them full ownership of the technology stack and the client relationship.
The second difference, if you had not guessed, is operational. As the term suggests, when an advice firm or DFM chooses to operate their own platform, they will be operationally responsible for the day-to-day administration of the platform services.
In other words, it brings another, more total level of control to the overall platform experience.
Exploring the pros and cons
So which model is best? Well, as you would expect, there is no one-size-fits-all approach – what is right for one firm might not be for another. That said, each route has its pros and cons, as well as its typical use cases.