The long-term downward trend in UK adviser platform pricing continues. Headline charges have been trimmed over the past year and special pricing deals between platforms and advisers have driven overall costs even lower.
For platforms charging 0.30%, and barely (if at all) making a profit, there’s only so much room left for platform charges to come down further.
Price is only one piece of the equation. The other part is what advisers ultimately use a platform for. Advisers first and foremost need platforms to fulfil basic functionality around transactions, custody and tax wrappers. Beyond that, for some advisers, the platforms are the hub from which all business is conducted; but for most, this role is performed by their back office system.
We’re seeing greater focus from advisers on the value that platforms add – whether that is customer service, technical support or even just reliability. Arguably, adviser firms with a limited or restricted investment proposition either don’t need an open architecture platform or they might have enough scale to develop their own. But this game is no longer just for the largest adviser firms.
Firms in the next tier down are also beginning to operate their own platforms – either white-labelling existing platforms or building their own on top of outsourced custody solutions. This avenue is increasingly attractive for firms who simply want a way to manage their range of model portfolios without all the extra thrills and spills that many platforms offer, which ultimately come at a cost.
Like it or not, platforms are moving towards being a commoditised part of the value chain and we could be already further down this path than many realise. Platforms need to look elsewhere for their margins.
All the latest trends in adviser platform pricing including bespoke pricing deals, the impact of MiFID II ex-post charges disclosure and our future charging expectations is in our latest report UK Adviser Platforms: Pricing. For more information contact Jean-Luc de Jonge.