Adviser-Controlled Platform Support Team: Creating Value by Design
Is it economical for firms to adopt an adviser-controlled platform? The answer depends on the AUA that can be migrated to the selected platform, the degree of automation/integration provided, and the number of legacy platforms that can be retired. KPMG estimates the support cost for adviser-controlled platforms at 12bps, which, at face value, wipes out all the cost savings.
Scale significantly impacts the cost-effectiveness of adopting an adviser-controlled platform. For instance, once the AUA surpasses £1bn and for consolidators who have acquired 10 or more platforms, the net costs could potentially be zero or even result in savings. This is derived from the retirement of multiple legacy platforms and the subsequent reduction in platform administration costs by taking out the cost of friction caused by multiple manual processes inherent in legacy platforms.
Modern platforms offer a range of benefits, including paperless and automated processes as standard and open APIs that facilitate integrations with surrounding systems to eliminate the need for double keying by relying on a single data source. These features significantly reduce the cost of platform administration and improve operational efficiencies as manual processes become relegated to exception handling rather than the norm. Therefore, when assessing the full cost of ownership, it's crucial to consider the potential substitution benefits, which can be substantial for firms with an acquisition agenda.
If the cost modelling is done correctly and the case is compelling, there are three key principles that must be followed to ensure the expected platform economics are realised and a lean and effective support model is possible:
Primacy. This means assets of between 70% to 90% can be moved to the selected platform. Leave the more esoteric features to other platforms.
Adopt, not adapt. If the platform can support your core proposition, don’t demand bells and whistles that are not currently supported. Vanilla adoption is king, and be prepared to tolerate some gaps as long as there is a clear and credible delivery roadmap.
Value-driven migration. Quantify the assets that can be moved and demonstrate the value uplift to clients and the firms. Agree on a realistic timeline and don’t let it drift.
The following illustration shows a potential operating model for an in-house support team supporting an adviser-controlled platform. It is targeted towards firms that are acquisitive and growing by consolidation. The model is composed of three core teams: first-line support and operations, transfers, and performance optimisation. To gain economies of scale, the first-line support and operations teams have been combined. For larger firms with multi-billions AUA these functions could be split out. The transfer team works best as a dedicated unit capable of taking on multiple transfers that move the bulk of the assets as a distinct projects allowing the remainder to be transitioned as part of BAU. The platform optimisation team is often neglected, and the goal is to ensure that firms get the most value from the platform by managing adoption and embedding in the shortest achievable timescales. The ultimate measure of success is when platform primacy is achieved for each firm. Think of this team as a catalyst, a substance that speeds up a chemical reaction with reduced energy.
Overcoming the inherent inertia in any organisation when subject to change needs managing and shouldn’t be left to chance.
To support this operational model, there are three key enablers:
A multichannel contact approach. Making full use of chat to provide near real-time information. If done well, it's as convenient as a phone call and much faster than e-mail. Plus, there is an inbuilt audit trail that reduces miscommunication and can be used for incident and root cause analysis. The other advantage of chat is in periods of peak demand or out-of-hours requests, it's easy for anyone in the support team or wider organisation with the appropriate skills and knowledge to respond.
Continuous improvement commitment. This is another idea borrowed from Scaled Agile Inspect and Adapt workshop. We recommend that these occur quarterly and, to minimise the impact on support, are conducted in two half-day sessions run out of hours (if you can incentivise the team) or on Friday afternoons. The first workshop is a retrospective that looks at the performance over the preceding quarter and identifies one key area for improvement. The second session focuses on brainstorming solutions and planning interventions along with the expected measurable benefits. For the curious, more details can be found at https://scaledagileframework.com/inspect-and-adapt/
KPIs. Cost to serve, primacy, adviser, and customer satisfaction are additional KPIs that should be used to track value creation and delivery.
The exam question is, how big is this team? Assuming AUA of £1bn, a team of 6 people is a good ballpark with two members in each team. As AUA increases, the team doesn't need to scale linearly. The transfer team size will be governed by the transfer approach, asset complexity, level of automation, and the number of concurrent transfers. The performance optimisation team will scale by the number of firms. The first-line support and operations team will scale by firm and client numbers. As a crude rule of thumb, one additional team member will be required for every 2000 clients added to the platform. So, assuming £1bn AUM the cost of the team is closer to 5bps and that ignores substitution benefits.
For firms operating a limited number of legacy platforms and with on-platform assets below £350mn, alternatives such as Fundment, P1 Investment Services, JustFA, and others are easier routes to efficiency and value generation than adopting an adviser-controlled platform. These new kids on the block provide a modern, fully automated tech stack with open APIs and attractive platform charges without changing your business model to provide in-house support. Ultimately, the choice depends on the firm size, scale of ambition, and degree of control required.
Simon Rogerson, CEO of the Octopus Group, is quoted as saying, “You will not win if technology is not at the heart of your business.” Creating more capacity for relationship-based activities that drive sustained value.
If you want to dive deeper into operating models designed for adviser-controlled platforms, please get in touch.