Platform market to see ‘accelerated flip’ to custom models

Platform market to see ‘accelerated flip’ to custom models
Credit: Jonathan Petersson/Pexels

The industry should brace itself for an “accelerated flip” from established adviser platforms to custom platforms such as Seccl and Multrees, according to a report.

In a whitepaper published earlier this week (May 11), consultancy Altus said delivering viable platform alternatives was a “significant challenge” in the current climate, due to most financial advisers still being wedded to established providers, and private equity money flowing through bigger providers.

But over the next decade, Altus said, a shift is set to take place. “In the next five to 10 years, we can expect a greater flow of assets to the likes of Seccl, Multrees, Hubwise and Fundment and the businesses they support,” it said.

“As customer expectations evolve, we think there could be an accelerated flip towards this model, where advisers hold more influence over platform manufacturing and input into development becoming the norm, ushering in a new generation for platforms.”

Altus believes the incoming Consumer Duty will further incentivise this switch, as its requirements for demonstrating fair value to retail clients will push on a move to straight-through processing and efficiency which these sorts of platform models can offer.

The top five platforms by assets under management still account for over 50 per cent of the total market share in the advised platform space, according to the report.

In 2021 assets rose to £930bn, with many of these “top” platforms routinely recording net sales of over £1bn.

However, the report highlighted how this 50 per cent market share figure has declined over the past 15 years, from a figure which was initially closer to 100 per cent.

The report suggested getting customised platforms “into a muscle car of their own” would be the catalyst for change, and that the likes of Hubwise, Seccl, Multrees and Fundment were all trying hard to do this.

“There is too much legacy for a Tesla equivalent to come into the platform space and ultimately disrupt the market, although the likes of Seccl, Multrees, Hubwise and Fundment are getting closer,” it said.

Consultancies seem to be split on the level of appetite among advisers for more customised platform models, which range from Multrees where advisers own the platform but there is a middle-office function provided to help them manage it, to Seccl, where more responsibility is placed on the advice firm to manage its own technology. 

While NextWealth had said in early 2021 that almost half of advisers planned to launch their own white-label platform in the next three years, by the end of the year it suggested this appetite was already “drying up”.

MD Heather Hopkins told FTAdviser in November advisers were questioning the operational costs involved in owning a platform, particularly in the event of selling up.

“For those looking to sell their adviser business, having your own platform can distract from the sale,” Hopkins explained. She went as far as to say it could “reduce the multiple paid” by the buyer.