Growth in platform 'tuping' to strengthen adviser white-labelling

Last week, Fundment told FTAdviser it had introduced more fee flexibility, allowing advisers to set different fees for individual clients and accounts.

Fees can be set either as a percentage of assets or as a fixed amount. One client might agree to an annual fixed fee with their adviser, while another client might agree to a percentage charge for one wrapper, and a fixed fee for another.

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‘We will see more of this’

Despite spiralling interest rates increasing the price of debt, platform providers such as Nucleus are still on the hunt for acquisitions.

Alpha FMC’s Northrop said increased consolidation of underlying systems and infrastructure which power the UK platforms market, and in turn an increased level of outsourcing for core commodity operations, tuping will become more common.

“Retention of experienced staff within the future operation of the outsourcer has its positives,” Northrop continued.

“These individuals can help a platform safely navigate the transition, retain the voice of the platform provider and shape the culture. 

“The overall trend of outsourcing should lead to greater commoditisation of core platform processes and lead to greater standardisation and efficiencies within the adviser platform market.”

“In addition, scale and efficiencies should lead to a lower cost for platform providers which in turn can be passed onto the end customer,” he concluded.

But Northrop acknowledged some of the drawbacks of the model, stating one was that the arrangement may be short-term and lead to further restructuring.

Another was that it can risk staff leaving.

Tuping could ‘diminish’ platforms’ knowledge

Tuping is not a new phenomenon, according to Altus' McCullam.

He told FTAdviser the tuping of people across to FNZ as the provider wins more clients “is the same direction of travel that has been happening in the wider investments industry for some time".

He explained: “Provider firms have been moving books of business to the likes of TCS/Diligenta, Capita, Atos, or Equinity as part of replatforming and business process outsource deals to update technology and address operational costs. 

“FNZ was one of the first movers in the platform market to deliver both the software and administration services to providers. This started out as custody and investment administration, but has moved into a broader customer and wrapper administration solution.”

McCullam said with a common underlying technology platform, there is opportunity for FNZ to improve automation and efficiency for common back-office processes which can then be applied across all the firms they serve. 

One challenge McCullam presented by tuping is it “often means the level of knowledge retained within their business diminishes”.

This, he said, could be cause for concern as they are still the regulated entity and carry accountability for their material outsource.