WM Market Reports

Advisors Should Develop Their Own Platforms, Face Up To Industry Shift - SEI

Tom Burroughes Group Editor London 3 April 2017

Advisors Should Develop Their Own Platforms, Face Up To Industry Shift - SEI

The US-headquartered firm is urging advisors to re-think their use of platforms, arguing that they need to consider developing their own systems to gain more control.

Wealth advisors unhappy with using clunky retail platforms that cannot be tailored to their needs are being urged to develop their own in-house offerings with outside help – and earn new sources of revenue.

SEI, the US-listed firm which provides investment processing, management, and operations solutions, has commissioned a report pointing to a new business model allowing advisors of a certain size to create their own platforms – with help from the likes of SEI. The report was carried out by the lang cat, a consultancy. In the past it has done work such as rating pricing and service quality of platforms such as those provided by Standard Life and Novia.

Common problems are that advisors find retail platforms expensive, there is a lack of integration between front-, middle- and back-office functions, and these platforms do not add value to advisors.

“The change in the landscape we are talking about is significant, but for high-growth or larger firms who want to look at something genuinely different, we think moving beyond the vanilla retail platform market will give businesses a great chance for real differentiation and - hopefully - a secure and predictable future,” said Mark Polson, founder of the lang cat and report author.

“This is also a seismic shift for providers to adjust to, and we think it is those who have models allowing advisor firms to approach and interact with the platform space in different ways who have the edge.

“It will not be for everyone of course, and certainly those with less than £500 million in assets under administration would have to think carefully about whether such a solution is required for their business. But for firms of a certain size with growth ambitions, there is now the option for the advisor-cum-platform model to start carving out a sizeable piece of the market for itself,” he said.

In a call with WealthBriefing, Kevin Russell, proposition director at SEI, said his firm is constantly assessing the impact on the platforms space of big changes taking place, including significant regulatory change and M&A developments. “Advisors are looking for something different, some aiming to establish how they can take more control,” he said.

“There is a driving concern that they [advisors] have thrown themselves in with a one big strategic partner without the full commercial case for doing it,” he said. If a platform provider changes, for example, the cost to an advisor of moving to a new one can be expensive and disruptive for clients. Another issue, he said, is that some platforms offer far more services and products than an advisor is likely to want to use, which means a large amount of the offerings are wasted and not worth the expense.

Some advisors, such as those wondering about succession planning, might prefer to develop their own solution, giving them more control and the ability to earn fees on top of their advice charge, he said. 

“Some of the most innovative and successful businesses in the UK advice space, such as True Potential and Fusion Wealth, have shown just how great an impact integrated technology solutions can have, and we expect increasing numbers to follow suit as the advice landscape continues to evolve,” he added.


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