What Should You Do If Your Platform is Taken Over?

22 May 2017

Platform longevity and the ability to support advisers' client value propositions and business processes are key

Platform consolidation is becoming a reality for more and more providers, and for the advisers who use them, with the number of takeovers and mergers increasing in recent years.

The trend has taken more time than some predicted to come to fruition, but some recent high-profile takeovers mean the issue of whether a platform will still be operating in five years’ time should very much be at the forefront of advisers’ minds.

For us, platform longevity – simply, will the platform be there in future or not – is one of the two big questions advisers need to ask when it comes to the technology they use (the other being, can the current platform of choice support advisers’ client value propositions and business processes).

The shift in the landscape means that, in our experience, the future comfort advisers had regarding the platforms they use, and how they support their businesses, is diminishing. However, there are some steps all advisers can take if it is announced that one of the platforms they use is involved in a takeover, either as the target or the acquirer.

Due diligence

Firstly, any such announcement will in all likelihood be the trigger point for carrying out a due diligence evaluation. That means going back to those questions advisers should ask when they select any platform:

  • Will it be here in future?
  • Are they confident the platforms can support their own ambitions for their businesses?

If the answer to both is yes, then the need to switch platforms may not be there, but if the answer is no, then it may be time to think about other options. However, as with any switch in how a business fundamentally operates, it is important to make a change for the right reasons.

Moving platforms – or changing the relationship with platform technology companies and becoming a platform in one’s own right – is a major decision that should not be driven by issues with your current technology provider alone.

Service levels

Put your goals first, then decide if the new owner can deliver.

A takeover of a platform may create some issues in terms of how advisers use it, and typically these manifest themselves in service levels. But much of this will be short-term, rather than long-term, so it is worth giving it some time for the new owner to take control, and avoid making a knee-jerk decision. 

More of an issue is the ultimate aim of the acquirer and whether it meets an adviser’s own strategic plans. For example, there could be a conflict between an advice business’ approach to investments and an acquirer’s own vertically-integrated model, which leads to pressure on the adviser to use solutions they simply don’t need. Clearly that could be a sign that it is time to move on, if the adviser does not want to use such products. 

Goals, then platform

All of this comes back to the re-evaluation point. The key for all advice firms is to put themselves and their goals first, and then decide if their current platform – and its new owner – can deliver its current needs, and support its ambitions.

If it no longer can, the good news for advisers is that there are alternatives out there, and there is also the option to now, for the first time, work with partners like us to create your own solution.