PFS founding member Batchelor on why he created a ‘non-profit platform’ for IFAs

His advisory firm, Wills and Trusts Wealth Management, established a discretionary fund manager called Trust DFM back in 2018. 

Batchelor said the DFM was on around 20 different commercial platforms at the time, all of which were profit-bearing.

But after reviewing the fees which came with hosting its DFM on third-party platforms, Batchelor and his team decided to build their own platform too. They now tout themselves as white-label platform provider Multrees’ first ever client.

“We realised, ‘why are we paying platforms money? Let's create a non-profit platform’,” Batchelor told FTAdviser.

The idea was to charge IFAs for the operating costs of the platform, getting rid of the need for clients to foot the cost of platforms’ profit margins.

Using its technology, the platform typically charges a 0.1 per cent fee to run operate, and 0.1-0.2 per cent for its DFM. Though these fees are subject to change, depending on the size of the IFA and the amount on the DFM and the platform.

“We charge what the costs are, we don’t charge a margin. Other platforms just can’t even compete,” said the PFS founder.

But money wasn’t the only driver. It was also about building in flexibility. 

“Even though at the time we were in the top 10 of clients within Transact based on size, they weren’t prepared to do some of the things that we wanted,” Batchelor explained.

“So, inevitably, we had to go down the route of creating our own platform. [...] You could argue the platform was by evolution rather than by design.

“We know what IFAs want, platforms don’t get it. They don’t know what IFAs want.”

Some IFAs see putting a platform in place as an opportunity to make an extra margin. I've always felt that’s the wrong approach.David Batchelor

Multrees offers a range of customisations, including publishing the return of individual investments. 

He admitted, however, that even Multrees doesn’t offer everything the firm wants. “It does, however, have the best mindset and is incredibly reasonably priced,” he added.

Wills and Trusts Wealth hasn’t tried to advertise the platform in the past. But now it’s at a point where more IFAs coming onboard will only lower the cost for all involved, according to Batchelor.

“All our funds under management become aggregated together to get our ongoing fees down considerably,” he explained.

But Batchelor acknowledged not all IFAs eyeing the white-label route are happy to leave off profit.

“Some IFAs see putting a platform in place as an opportunity to make an extra margin,” he said. “I've always felt that’s the wrong approach.”

The managing director continued: “You should be doing it for the client’s benefit. If you reduce the client’s fees by taking away the platform margin, then the clients will stay with you because a) you’ve helped them build something they want, and b) it’s cheaper than going to any other platform.”

For those who align with his vision, Batchelor feels certain of a future where a whole network of advice firms and producer groups will come together to reduce charges and provide more services with the benefit of size.

“There’s massive tangible assets in size,” he said, citing the ability to train paraplanners alongside other advisers across a network such as this.

You should be doing it for the client’s benefit. If you reduce the client’s fees by taking away the platform margin, then the clients will stay with you.Batchelor

Asked whether every IFA could logistically do this, Batchelor admitted “there’s no doubt size helps” when you’re getting started.

Wills and Trusts Wealth, which started back in 1992, only deals with private clients and their families, and focuses purely on growing wealth and passing it down the generations. Today, it has around 920 clients.

Asked whether the platform could get to a point where it is in too high demand, Batchelor said it’s less about how much, and more about working with “the right sorts of firms”.

“I don't think it's a matter of how many more because quite frankly, there's not a lot more to managing a billion than £10bn. It’s just some more zeros.

“What is important is only working with IFAs that have the same mindset. You don’t want to deal with an IFA that has a short-term mindset and is looking to sell their business, someone who doesn't put their clients first. And of course, everyone ‘says’ they put their clients first but then you look at what they’re doing and ask ‘does the proof demonstrate it?’

“You have to find firms you can work with. I don’t think there’s a cap on the number of firms we can take on. But I do think there’s a cap on the types of firms with the right mindset to do this.”

ruby.hinchliffe@ft.com