Breaking Free from Retail Platforms: A Smarter Path to Institutional-Grade Investment Solutions
The Growth Trap in Wealth Management
For investment firms, the early years are often straightforward: a retail platform provides the foundation to manage client assets, automate processes, and scale efficiently. But as firms grow, that same platform can become a limiting factor rather than an enabler.
This is the paradox facing mid-sized investment firms today. While large institutions have the infrastructure and resources to operate their own platforms, smaller firms remain locked into retail solutions that restrict flexibility, increase costs, and create operational inefficiencies.
So, what happens when a firm outgrows a retail platform but isn’t yet ready to take on the full cost and complexity of an institutional-grade system?
For many, this middle ground has been one of the biggest challenges in wealth management—but the landscape is evolving, and new solutions are emerging.
Why Retail Platforms Become a Barrier to Growth
Retail platforms serve a purpose: they provide access, ease of use, and a simplified structure for firms starting out. But their limitations become more apparent as firms seek greater control, efficiency, and scale.
1. Cost vs. Value: The Hidden Expense of Retail Platforms
Retail platforms are often marketed as cost-effective, but this doesn’t tell the full story. Their fee structures are designed for small-scale operations, and as firms grow, the costs become disproportionate.
For firms managing £250m+ in assets, the cumulative platform fees can often exceed what it would cost to operate a dedicated, institutional-grade solution. Yet, transitioning to an institutional platform can seem financially prohibitive—with some custody providers requiring minimum fees of £330k per year.
This creates a structural inefficiency: firms are either paying too much for a system that no longer fits their needs or unable to justify the cost of an upgrade.
2. Limited Flexibility & Control
Retail platforms are designed for mass-market appeal, meaning they prioritise simplicity over customisation. But as firms scale, their needs become more sophisticated:
- More control over fees, trading, and portfolio management.
- More flexibility in client reporting and data access.
- More integration with specialist investment tools and third-party services.
A firm looking to enhance its client proposition cannot afford to be constrained by a platform that dictates its operational model.
3. The Risk of Stagnation
The biggest issue for growing firms? Retail platforms don’t evolve with them.
Once a firm hits a certain level of complexity—whether it’s offering more bespoke investment solutions, launching its own funds, or needing deeper integrations—it often finds that its platform is a roadblock rather than a foundation for expansion.
This is when firms start exploring alternatives—but the leap from retail to institutional custody isn’t always straightforward.
The Challenge of Moving Up: Why Many Firms Struggle to Transition
For firms ready to scale beyond a retail platform, the move to an institutional-grade solution can be daunting.
The High Barrier to Entry
The infrastructure costs of institutional custodians can be prohibitively high. Most large providers have minimum fee thresholds that make them unviable for firms managing less than £2bn in assets.
This creates a scenario where firms either:
- Stick with their existing retail platform—despite its limitations.
- Take on a significant financial burden before they’re fully ready.
Neither option is ideal, leaving many firms stuck in limbo.
Operational Complexity & Resource Demands
Institutional platforms offer greater flexibility, but they also require firms to take on more operational responsibility:
- Managing static data and maintaining compliance processes.
- Handling fee structures and trade execution.
- Customising client reporting and portfolio management.
Without the right expertise, making this transition can be overwhelming—leading to increased operational risk and inefficiency.
A Lack of Transitional Support
The biggest challenge? Most firms don’t have a clear pathway to move from a retail platform to an institutional-grade solution.
Custodians typically provide infrastructure, not operational guidance, leaving firms to navigate the complexities alone. This leads to delays, misconfigurations, and inefficiencies that ultimately negate the benefits of the move.
So, what’s the answer?
The Future: A Smarter Approach to Institutional-Grade Solutions
The wealth management industry is changing, and the next wave of platform solutions is designed to bridge the gap between retail and institutional custody.
Instead of forcing firms to choose between restrictive retail platforms and complex institutional systems, new models—such as Investment Platform as a Service (IPaaS)—are offering a more flexible, cost-effective alternative.
Conclusion: The Middle Ground No Longer Needs to Exist
The dilemma of being “too big” for a retail platform but “too small” for an institutional one has long been a roadblock for investment firms. But the emergence of new platform models is changing this equation.
Firms now have a way to break free from restrictive retail platforms without taking on unnecessary risk or complexity.
The next evolution in wealth management isn’t just about technology—it’s about giving firms the autonomy and flexibility to operate at an institutional level while still maintaining control over their costs and operations.
For firms looking to scale, the real question is no longer “When should we move?” but rather “How do we ensure we transition in a way that strengthens our business rather than disrupts it?”
Because in an industry where platform service and efficiency can make or break a firm’s success, choosing the right path forward isn’t just about technology—it’s about securing a long-term competitive advantage.