The platform market has reached a point of inflection in which platforms will be treated less like products for individual clients and more like investment services that work for the benefit of both investors and their advisers. Legacy platforms will need to adapt or fight over the rest of the advice sector.

We describe this evolution in our newly published white paper – Next generation platforms: transforming wealth management – produced in association with SS&C.

Advisers increasingly want to concentrate clients’ assets on a single platform (or at least a very small number). The reason is partly cost – they can negotiate much better rates. The other driver is that using multiple platforms undermines efficiency and increases operational risk.

The technology to make this a reality has caught up. More flexible platforms have emerged, with integration via APIs and a focus on running investment solutions rather than simply acting as a shop window for funds.

Larger advice firms are going beyond focusing on using fewer platforms. A new generation of adviser-controlled platforms has appeared that are mostly relevant for firms with at least £500,000 AUA. The advice firm takes on additional responsibilities –– and can choose to be remunerated for them.

However, some for the main responsibilities for running important aspects of the platform like custody, trading, client money rules (CASS) and platform software can be outsourced to the underlying platform service operator, such as SS&C Hubwise, Seccl or Multrees.

With the advice firm in control, it can tailor the proposition and pricing to meet the cost and functional needs of almost every client segment. The advice firm ceases to be a price and proposition taker – waiting for the platform provider’s priorities to catch up with market developments – and can control these variables to meet the evolving needs of its clients.

The ways that advisers use and choose platforms are fundamentally shifting. Picking platforms individually for each client leads to demonstrably worse outcomes than developing strategic relationships with platforms. Whether advice firms opt to run their own or use a third-party platform, they will be looking to use services that will help make them more efficient – which should ultimately work to their clients’ advantage.

Platforum has recently published Next generation platforms: transforming wealth management describing the evolution of adviser-controlled platforms, sponsored by SS&C. Click here to access the report.