Platform structures, operating models and technology
What this domain tests
How a platform is legally structured, who holds the assets, which functions are outsourced, and how the technology stack fits together. Expect questions on bundled versus unbundled models, nominee custody, and the regulatory consequences of outsourcing.
Delivery and commercial models
- Adviser platform (business-to-business-to-consumer), D2C, hybrid, workplace and white-label.
- Bundled: proprietary funds with a single inclusive charge, historically including commission. Unbundled: clean share classes plus a separate platform charge - now the norm post-RDR.
- Full wrap (ISA, SIPP, GIA, bonds, offshore) versus fund supermarket (funds only) versus execution-only trading platform.
Legal and asset structure
- Client investments are registered in the name of a nominee company, usually a platform subsidiary but sometimes a third-party custodian. Legal title sits with the nominee; beneficial title stays with the client.
- Custody assets fall under CASS 6; client money falls under CASS 7. These are separate regimes with separate reconciliation duties.
- The firm needs the correct permissions - safeguarding and administering investments, arranging custody, dealing as agent.
Technology stack
- Front end (client and adviser portals, mobile), middleware (order routing, model management, rebalancing), back office (books and records, valuation, fee calculation), and links to CREST and fund managers.
- Many platforms outsource administration to third-party providers; others build in-house. Under SYSC 8 the firm remains fully responsible for outsourced functions - outsourcing never outsources accountability.
- APIs and adviser back-office integrations reduce rekeying; straight-through processing cuts manual error and cost.
Worked example
An advice firm with £150m of assets wants a white-label platform. Building in-house means high fixed cost and an 18–24 month delivery; renting a third-party administrator with a white-label front end launches faster and cheaper at that scale. The in-house route only wins at multi-billion scale, where the per-asset outsourcing charge exceeds the fixed build cost. Reason: platform economics are scale economics.
Traps that cost marks
- Saying the platform “owns” client assets - it does not.
- Treating CASS 6 and CASS 7 as interchangeable.
- Assuming outsourcing removes regulatory responsibility.
- Forgetting that a nominee structure can sit with a third party, not only an in-house company.