Nick French, commercial director at P1 Investment Services, considers how platform costs extend beyond headline charges to include the operational friction placed on advice firms.

In recent conversations with financial advisers across the UK, one recurring theme keeps bubbling to the surface: platforms are no longer viewed as dynamic partners or engines of wealth creation.

Instead, they have settled into something far more mundane – an embedded administration tool. As research from Platforum highlights, advisers increasingly treat platforms as a basic utility, a necessary friction point that must be managed, and ultimately, a tax on doing business.

Like any government tax regime, the levies imposed by platforms are highly variable, often opaque, and rarely deliver service quality proportionate to the fee. You have the upfront, unavoidable fees; the surcharges you actively try to mitigate; the outright unfair policies, retained interest on client cash being an egregious example, and, worst of all, the stealth taxes. While clients pay the explicit platform bill out of their portfolios, it is the adviser who pays the stealth taxes in lost time, operational drag, and administrative bloat.

The HNW paradox

When discussing low-cost platform solutions with advisers, I frequently hear a familiar refrain: “That low-cost model sounds great for my lower-value, low-asset clients.”

It’s an understandable reaction, but it misses the fundamental economic reality. Saying low-cost platforms are primarily for low-asset clients is like saying low tax rates only benefit low earners. While technically true in terms of baseline access, it completely overlooks the much larger truth that low tax rates overwhelmingly benefit high earners.

Consider how platform pricing works in practice.

A flat, low-tier fee structure, say 0.15% capped at £1 million, is intentionally regressive in the best possible way for wealthy clients.

Put your hand up if you’d jump at an income tax regime that taxes your income at 15% up to £100,000, with anything you earn after that being yours to keep, tax-free. Now ask yourself whether you’re a low or a high earner? The truth is, the biggest beneficiaries of capped, low-percentage structures are unequivocally those with the largest assets.

Yet across the wealth management industry, high-net-worth clients are routinely subjected to uncapped basis-point drag that penalises them simply for accumulating wealth. A client with £2 million on a traditional basis-point platform is often paying tens of thousands of pounds over a decade for essentially the same core database infrastructure as a client with £200,000. Why should successful wealth accumulation turn a client into a target for platform extraction?

Value is not defined by cost

Humans are hardwired to assume that expensive equals luxury and quality, and that cheap equals low-grade or inferior. But in modern financial technology, these shortcuts can work directly against our best interests. Low-cost does not necessarily mean low value, just as a hefty price tag rarely guarantees premium service.

Under Consumer Duty, the fair value conversation is no longer an abstract philosophical debate, it’s a regulatory mandate. High-asset clients, by virtue of their pot size, are often paying the highest absolute fees while receiving identical platform capabilities. There is zero evidence that a client with £1.5 million wants clunky paper forms, wet signatures, and postal delays simply because they pay more. They don’t want “white-glove” paper friction, they want intuitive digital interfaces, instant trading execution, and seamless reporting. Charging a wealthy client an uncapped basis-point fee while delivering legacy service isn’t premium care, it’s a clear failure of Consumer Duty value assessment.

Modern digital infrastructure allows platforms to scale down costs dramatically without compromising operational capability. Delivering that efficiency directly to high-asset clients isn’t just good commercial logic, it’s a fiduciary responsibility.

The Stealth Tax on advisers

If explicit charges represent the client’s platform tax, operational friction represents the stealth tax paid directly by the advisory firm.

Every time an adviser or paraplanner is forced to print, sign, stamp and post physical documentation, a micro-tax is levied on the firm’s balance sheet. Everytime a platform fails to offer deep API integration with your firm’s back-office software, forcing the team to run multiple disconnected systems and rekey client data manually, advisers are paying an admin ‘tax’.

These micro-taxes compound quietly day after day. They drain staff capacity, inflate operational overheads, and drag teams away from high-value client engagement and profitable fee-earning activities. When a platform retains interest on client cash while simultaneously charging platform fees, or requires manual intervention for routine portfolio rebalancing, they are effectively outsourcing their infrastructure debt onto your firm.

Auditing your platform tax bill

It is time for advisers to re-evaluate how they view platform costs. Look beyond the baseline percentage on a marketing datasheet and audit the total tax burden, both the explicit charges levied on your clients’ life savings and the hidden stealth taxes imposed on your practice’s time.

By embracing scalable, low-cost, technology-first platforms, you aren’t just creating a viable home for smaller accounts. You are delivering radical, demonstrable value to your highest-value clients, eliminating administrative friction, and taking back control of your practice’s most precious asset… your time.

Nick French, commercial director, P1 Investment Services