The advised platform market spent 2023 bedevilled by outflows, botched technology upgrades and sharpening regulatory intervention.
It then limped into 2024 and has spent the year – you guessed it – bedevilled by outflows, botched technology upgrades and sharpening regulatory intervention.
To give a sense of the struggle, standalone listed firms trade at 30% of their 2020 valuations (relative to assets under advice). Public companies with meaningful platform divisions, meanwhile, find themselves battered as outflows perpetuate.
The top performers continue to be those with stable ownership – Transact, Aviva, AJ Bell and Quilter have never been far from the top of the net inflow charts. But it’s hard to recall the last time a major firm made a new strategic decision to select an established wrap platform to provide its core technology infrastructure.
The advised platform market has spent 2024 bedevilled by outflows, botched technology upgrades and sharpening regulatory intervention
Interestingly, for the first time ever, Q3 market share data saw a new player among the top five firms for net inflows, as most incumbents continued to tread negative water (some in wildly negative territory).
At the same time, media reports suggest this has been the first year a planned disposal has been unable to find a buyer – a terribly awkward truth for sellers to explain away over the coming years, especially as so many continue to suffer net outflows.
Taken together, they seem like the clearest symptoms yet of a market in flux, as legacy assumptions look to give way, a new, more digital sector begins to finally emerge.
There are a load of themes driving all this, but they ultimately come down to technology and organisational motivation.
A huge portion of adviser productivity – and customer cost – is lost to unnecessary query handling and wraparound operations
After all, in the current set-up, a substantial portion of adviser productivity – and customer cost – is lost to unnecessary query handling and wraparound operations, designed to cover up inadequate core technologies.
More and more firms get this. They’re surmising that to build efficient, low risk and highly valuable businesses – ones that are set up to deliver better experiences for their customers – they need a fundamentally more productive outfit, which cuts unnecessary technology bloat out of the picture.
For example, this year we’ve seen Fairstone work with FNZ, Ascot Lloyd link up with SS&C, and Söderberg partner with us at Seccl to try and build a better future. I’m not party to the finer detail of all these arrangements (or how they’re going), but I do know the motivation for each was much less about capturing a few basis points and much, much more about building a drastically more efficient business.
Elsewhere, we’re starting to see innovations emerge that challenge the very idea of a standalone platform.
We’re starting to see innovations emerge that challenge the very idea of a standalone platform
I have an enormous conflict of interest in this point (as Seccl is involved), but the springtime launch of the Timeline platform felt like a material step forward in end-to-end automation – promising to create a seamless platform experience that meets planners where they work. Let’s hope the SS&C/Intelliflo WealthLink proposition delivers in a similar way.
I suspect we’ll see a lot more of this kind of thing, as it becomes easier to connect the various technologies around the sector.
The possibilities are super-exciting, but we should also tread with caution. For all the talk about APIs and connectivity, the substantial majority of sector integrations are clunky, fragile and expensive to maintain. In most cases, this is because the integration ‘layer’ has been bolted on top of the underlying technology as an afterthought.
As well as surfacing only a portion of the overall capability, it’s essentially ‘middleware’ – exposed to changes on either side of the integration, with all the stability challenges and long-term maintenance costs that brings.
Platform technologies will need to become connectivity-first, not connectivity-second, if they are to have enduring relevance
Cautionary tale to one side, more modern and genuinely API-first players – firms like Moneyinfo and Plannr – are starting to showcase the sizeable breakthroughs in terms of time to market, implementation costs and end-to-end gains this connectivity provides.
This is where the action is and platform technologies will need to become connectivity-first, not connectivity-second, if they are to have enduring relevance. The advice sector’s medium-term economics won’t support looseness here, as costs continue to come under pressure along the chain.
Even beyond the economics, it seems important the online (web or app-based) client journeys rapidly rise to the bar set by other sectors, or even elsewhere in financial services (look at modern digital banking’s capabilities and compare those to the typical advice journey).
It’s not just about improving service levels or driving operational performance but transforming client experience, too. The advice firms who deliver real-time responses to customer instructions will generate greater trust and confidence in their business, while those relying on junk and old-school processes will head in the opposite direction.
I wouldn’t underestimate the good that can come from such a well-informed, strongly-disciplined and customer-aligned group
Simply because a scanned PDF was just about OK in 2018 and the Covid-triggered introduction of digital signatures helped regain some relevance, doesn’t mean such tools are acceptable now, or will remain so into the future.
In other words, 2024 closes with a platform sector in transition. Perhaps to underscore the point, we recently saw the establishment of the UK Platforms Association, a new trade body for the sector. Such organisations are often derided, dismissed or (at best) tolerated, but I wouldn’t underestimate the good that can come from such a well-informed, strongly-disciplined and customer-aligned group.
Platforms have a hugely significant role in underpinning and enabling end-to-end efficiency – one it’s important the sector respects.
Here’s hoping 2025 gives rise to a growing sector, an end to failed tech programmes and the reemergence of something that can stop running from the FCA and is instead setting the regulatory agenda…
David Ferguson is chief executive officer at Seccl
