Replatforming without tears: Do You Feel Lucky?
The standout features from the Defaqto Service Review 2024 were:
34% of adviser changed their main platform up from 28% the previous year (Way higher than I expected).
Satisfaction scores were down by 7%, and the top 3 areas of concern were new business, servicing existing business, and platform transition and implementation.
Firms I speak to would only replatform as a last resort. Usually, the trigger is service failures that impact their clients, the most annoying being glitches that impact regular payments. Cost is a consideration, as is technology integration, but client-facing service failures create the tipping point. Firms are reluctant to replatform for several reasons, including:
Client disturbance.
The effort involved and the risks of making mistakes, especially with client payments.
Lack of knowledge: (My IFA said they last changed platforms five years ago and have forgotten how to do it).
Despite these barriers, firms can and do change their primary platform; one in three did so in 2023. The advent of Adviser as a Platform is fuelled by a raft of challenger platforms that have developed white-labeled offerings with a modern tech foundation that eliminates integration barriers and provides automated digital journeys and intuitive client interfaces. Plus, they are easy for advisers to adopt and use, and the platform fees significantly undercut many legacy providers.
However, there are providers like 7IM and Parmenion, who are renowned for service excellence. Between them, they scooped 9 first places out of the 11 service categories in this year’s Defaqto Service Review. These are good alternatives for firms wanting to replatform but not going down the white-label route. The decision to operate your own platform is significant and won’t be right for every firm.
Over the next few weeks, Mark Mortimer and I will write a series articles that provide a step-by-step guide to replatforming. We hope this will remove the FUD by defining an easy-to-adopt assessment and implementation framework that reduces client disturbance, risk, time, and effort.
I asked one adviser what it would take to replatform. His response was, “A gun to my head,” and that’s the problem. The pain threshold has to be unbearable before some firms are compelled to act. In the coming weeks, we will outline an approach that doesn’t have the drama of Harry Callaghan pulling out his Magnum .44 and asking: "Do you feel lucky? Well, do ya?”