Adviser-as-platform adoption levels off as execution moulds adviser platform market

The adviser platform market is now being moulded less by headline model shifts and more by execution, according to a report from NextWealth.

It showed that, following a period of momentum for adviser-as-platform and Model-b propositions, adoption patterns had levelled off.

However, NextWealth emphasised that this stabilisation did not mean that competition had eased.

With the dust settling following an initial shake-up in the adviser platform market, change was being driven less by headline model shifts and more by how effectively platforms support migration, adviser adoption, data and integration, and the operating models of advice firms at scale.

The report argued that Model-b propositions were not a straight upgrade and were more of a trade-off.

Firms were reporting improved onboarding, client experience, and lean operations with the model.

While modern interfaces and operational efficiencies were seen as clear gains, they could require advice firms to accept limitations in the breadth or maturity of functionality.

The trade-off in functional gaps meant firms were often retaining third-party platforms for clients with more complex needs, NextWealth noted.

It argued that platform launches were rarely a like-for-like replacement of existing third-party platforms.

“Firms are making deliberate trade-offs, often segmenting by client type or use case,” said NextWealth associate research director and report author, Chanelle Paynter.

“This helps explain why many firms retain third-party platforms alongside new ones, and why a multi-platform strategy is the likely end-state for most large firms rather than wholesale replacement.”

Although the adviser platform market did not appear to be converging on a single, dominant model, firms were becoming more intentional by matching platform strategy to firm type and segmenting by client type.

“The practical result is a durable matrix of platform roles rather than a single platform decision, where different platforms are selected to do different jobs inside the same firm,” Paynter stated.

“For third-party platforms, the risk isn’t simply that large firms become platform operators. It is that these firms are tightening platform panels, standardising processes, and becoming more deliberate about where new business flows.

“Platform ownership is a tool for integration and control of the client journey. It is not, and rarely ever was, a pursuit of margin. The result is a market where multi-platform strategies persist.”

For firms looking to launch a platform, expected gains were focusing on being better able to serve lower value clients, where tighter integration and straight-through processing could materially improve efficiency.

“As a third-party platform this highlights both a challenge and opportunity,” said Paynter.

“Many firms are drawn to Model-b not simply to capture more economics, but because they believe it gives them a better chance of solving for efficiency, client experience, and lower value clients.

“Third-party platforms that can demonstrate a credible answer to these same needs are better placed to retain relationships and compete effectively against the Model-b proposition.”

NextWealth’s research highlighted the emergence of a new platform model variant, White-label plus.

However, there were marked differences in financial planning firms’ and providers’ understanding of what this new model looked like in practice.

Some interpretations, such as taking a fee for ‘relatively light-touch work’ while the client contract remained with a third-party platform, had the potential to raise a regulatory red flag, NextWealth said.

“At this stage, White-label plus is an emerging commercial concept rather than an established market model,” Paynter noted.

“It remains to be seen whether it develops into a durable proposition or is constrained by regulatory expectations.

“Any fee arrangement must be proportionate to the work being performed. With Consumer Duty expectations in focus, firms and platforms exploring this model should ensure they can robustly evidence the value being delivered, before regulators ask them to.”

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