Morningstar Wealth Platform boss bemused by contracts issue

As part of Praemium's acquisition by Morningstar, employees of the adviser platform were asked to move onto new contracts which required an extra two and a half hours' work per week for no extra pay.

Mark Sanderson highlighted the benefits of the new Morningstar contracts, which he said are much broader than what Praemium was able to offer, including enhanced parental leave, education support and stipends.

The new Morningstar contracts also offer the option for a sabbatical after four years’ employment, improved life and critical illness insurance policies, and financial contributions towards industry exams.

There have been no resignations from the team, FTAdviser understands.

Sanderson said a lot of the team was shocked it made it into the news.

[Management] should spend more time with the teams and ask them what’s going onMark Sanderson, Morningstar

“Everyone was given the opportunity to do one on ones…no-one was under any obligation to sign the contracts, and there was no punishment for not signing the contract.”

Sanderson, who is based in Dubai, said he has spent time with the platform’s teams in London, Edinburgh and Birmingham.

“Everyone seems upbeat and excited about the strategy and what happens next.”

Bt he did acknowledge that some attention should be given to the issue from management.

“When someone, or a group of people, feel so strongly about something, you need to listen.”

“The contract situation was not really a situation at all in the end, but that being said, if it has prompted this [dissatisfaction], [we should] take a break and spend more time with the teams and ask them what’s going on.”

Platform plans

One of the key issues for the platform sector recently has been the development and improvement of new technology.

The majority of platforms were built between 10 and 15 years ago, and since then a lot of the technology has not changed. 

There have been many calls for an upgrade to the IT infrastructure in the sector, though it has been acknowledged that platforms’ integration with more software firms will not happen quickly. 

I think it is really clumsy to say the only way to get integration is to choose one providerMark Sanderson, Morningstar

One of the biggest impacts of this is that many platforms and software that IFAs use do not integrate particularly well.

Sanderson used the example of a cashflow model not integrating with a practice management system, and the latter not connecting to a platform, and the platform not connecting to the risk profiling system.

Trying to build one system for IFAs to use on its own is not the answer though, he said.

“I think it is really clumsy to say the only way to get integration is to choose one provider, because that is not actually solving the problem….that is leveraging the problem to create another problem.”

There is no point in “boilerplating” the industry, Sanderson said, as the advice process varies so much from one client to another.

“Our belief is that, yes, we have a lot of great things that people can use, but as an adviser, your IP is a really good advice process.”

To this end, the platform shares its system as a public API.

“The adviser wants to curate [technology] offerings for themselves.”

Acquisitions 

Morningstar’s acquisition of Praemium was announced at the end of 2021, just after the Bank of England raised the base rate of interest in the UK for the first time since 2018. 

The deal, worth £35mn, was one of the last platform acquisitions before the M&A market cooled off as financial markets wobbled amid rising interest rates and high inflation.

Sanderson said there were “dozens” of firms talking to Praemium about a potential acquisition.

There is more consolidation in the markets to come, he said.

“This year it [will] probably be harder for people to fund those [acquisitions], but on a two or three-year horizon we will see another [cycle of acquisitions]…for the nature of the firms who are buying, that has to be the case.”

sally.hickey@ft.com