Article 7 steps for building an effective platform strategy

Choosing the right platform model is one of the most important strategic decisions an advice firm can make, but it’s not always a straightforward one. With a large variety of platforms available – from third-party providers to fully customised solutions – advisers must carefully consider which option aligns best with their business needs, client expectations, and regulatory requirements.

To support you with these choices, we’ve sponsored NextWealth’s Platforms Unpacked guide – which offers a thorough examination of the opportunities, benefits, and risks associated with different platform models.¹ Based on the guide, this article sets out the seven steps you could follow when designing and implementing a platform strategy that’s unique and invaluable – both to your business and your clients.

• Step one: define your business vision and priorities
• Step two: understand your business culture and find a partner that fits
• Step three: consider your clients' needs - now and in the future
• Step four: get specific on your operational problems
• Step five: agree your due diligence criteria to evaluate potential partners
• Step six: build a business case
• Step seven: plan your resources

Step one: define your business vision and priorities

As a starting point, most business decisions begin with forming an understanding of what your firm is, what it wants to be, and how it will get there.

For example – do you see yourself focusing on a specific role in the advice delivery chain, or do you have ambitions to branch out? Similarly, do you want to be an innovative tech-first proposition, or are you more cost-led and value face-to-face relationships?

Having an understanding of your vision and priorities, for both now and the future, is key to building a platform strategy that fulfils your wants and sets you up to achieve your goals.

Step two: understand your business culture and find a partner that fits

When searching for a platform, there’s no doubt that the economics of the deal, regulatory compliance of the possible processing and outputs, and quality of the available tech are all elements you’ll want to consider.

However, NextWealth’s research highlighted that finding a platform partner that shares your firm’s cultural values, ambitions and ways of working is just as, if not more, important to the final decision.

Aligning with a partner that shares your core beliefs and work patterns not only allows for synergy in how your platform functions to serve the present, but also sets you both up to grow and develop as your business, platform and clients’ needs change.

Step three: consider your clients' needs – now and in the future

While it probably goes without saying, the final decision on your chosen platform model and provider should be driven by its ability to serve your clients and support you in a way that offers fair value and good outcomes.

Not only should you consider the needs of your current client book, but if you’re planning to diversify your proposition, the types of client you target, or simply think life will look different in the future, you should also plan for how you can support your clients’ evolving needs in the long run. And with the rollout of Consumer Duty and its emphasis on good outcomes continuing to ripple throughout the world of financial advice, never has this consideration been more important than now.

In terms of how you apply this, the research suggests advisers are fairly split. It was universally recognised that greater segmentation by a wider range of characteristics was a good approach, but the adoption of either a more consistent single platform strategy or a more adaptable multi-platform strategy drew mixed responses.

Either way, from a regulatory perspective, your key focus should be less about the decision itself and more on evidencing the reasons why you made that choice for the benefit of your clients.

Step four: get specific on your operational problems

Developing an effective platform strategy is not just about maximising what you’re good at, but also about targeting areas where you see room for improvement from an operational perspective.

NextWealth’s research indicated that advisers score their current platforms lowest on integration within their tech stack, while ease of use also comes in under platform average. Beyond the platform itself, such issues could lead to unhelpful delays in supporting your clients, or could require you to direct greater resources in working around them.

One way of ensuring you factor operational challenges into your platform strategy is to write a clear and objective problem statement, describing the issue’s current state and outlining its desired future state. Be specific about where its currently letting you down, and be sure to include any metrics you can measure progress against.

Step five: agree your due diligence criteria to evaluate potential partners

Much like with finding a cultural fit, you’ll also want to develop measures for assessing how the available platforms and their providers fulfil your functional and business needs.

For example – you may want to do your due diligence on whether any potential partners have had issues with regulators in the past, or weigh up the benefits offered by different tech propositions. You’ll also want to identify the roles and responsibilities involved in managing your platform and the relationship, as well as whether you’ll need any new FCA permissions for what you’re hoping to do.

Your criteria could end up being incredibly detailed and constantly evolving over time, but it further supports your efforts to find the right platform and also evidence how you came to your decision.

Step six: build a business case

If you’re proposing to run your own platform as an advice business, you’ll likely need to develop a robust business case to share with your senior leadership team, your staff, and possibly the FCA.

When doing so, be sure not to undervalue the cost and time that’ll be dedicated to the more human elements of change management. NextWealth estimate that 75% of a tech upgrade’s impact is derived from engaging staff and supporting them to drive change.

Step seven: plan your resources

As with any task, identifying the resources you’ll need and planning for how you’ll use them is one of the most important steps. This includes more objective inputs such as project funding and head count, and less defined concepts like wellbeing support for staff.

In the case of platforms, one of the biggest considerations is how much IT resource you’ll need to commit to the change project. Some platform strategies may require a smaller amount, especially if you plan on using an unbranded third-party solution. However, building your own platform is likely to be far more IT-intensive, requiring careful planning and structured processes.

How to find out more

Having completed the seven steps for developing an effective platform strategy, you hopefully should feel more confident that your platform decisions, implementation and evolution are well-informed, sustainable, compliant and outcome-driven. It may be a challenging task to undergo, but the result should be a platform that better supports your company’s and clients’ goals.

To learn more about the platforms market, you can read NextWealth’s full guide here. For more tips on running your advice business, you can also visit our Adviser insights hub.