A few days ago, I was speaking with an MFD from Pune and he said, “I was on my own for many years. Then I joined a platform.”

I asked him why. His answer was interesting.

The platform had created a lot of noise in the industry. Some very respected and successful MFDs had joined it. There were familiar names, people who had built substantial businesses over decades. There was excitement around technology, scale, AI, the future of distribution and everything that a modern MFD business was apparently supposed to become.

If many stalwarts were joining, he thought, there must be something there. 

“I joined too. For some time, there was excitement. There were presentations, promises, technology conversations and a feeling that he was now part of something bigger. Then, slowly the excitement began to disappear.”

He had been using a particular software before joining the platform. After joining, he discovered that he was essentially using the same software again except now he was also sharing a percentage of his revenue and paying certain additional fees.

There were grand conversations about technology and AI given by the founder across multiple forums. But beyond the vocabulary, there were no real capabilities being created inside this business.

The platform had changed…His business had not.

Eventually, the platform itself went through a change in ownership. Several MFDs left. A few had already left before that. Others began questioning why they were there in the first place.

Now this gentleman from Pune had reached a new conclusion.

“I think I should just do everything on my own.”

I paused for 15 seconds and then said, “I think you may be about to make your second mistake.”

His first mistake was making a strategic decision by looking at the big names (not what the real value proposition was) and deciding to join. His second may be making another strategic decision purely because the first one disappointed him.

There is a dangerous tendency in business to move from one extreme to another without ever stopping in the middle to ask the most important question: What am I trying to build?

When he joined the platform, perhaps the question was, “Who else has joined?” Now that he is disappointed, the question has become, “Why do I need anybody at all?”

Neither question is particularly useful. The right questions are much harder.

Why did I want to join a platform in the first place?

What was missing in my business?

What was I trying to achieve that I believed would be difficult to achieve alone?

Was I trying to grow faster?

Was I trying to acquire larger clients?

Was I trying to build a stronger second line?

Was I trying to create better processes?

Was I trying to recruit and retain better people?

Was I trying to improve the client experience?

Was I looking for succession?

Was I trying to create a business that could function without me?

Was I trying to become more profitable?

Was I trying to build something more valuable?

Was I trying to transform a practice into an institution?

If those were the objectives then, what exactly has changed now?

Nothing in his case.

Yes, the platform failed you but that does not necessarily mean the original problem disappeared.

This is a mistake I see entrepreneurs make all the time. They confuse a bad solution with a nonexistent problem.

Imagine you have severe back pain. You visit a doctor. The treatment does not work. 

What is the conclusion should you reach?

That this treatment did not work or that you never had back pain in the first place? 

However, this is precisely what happens in business.

“I hired a senior person, and it did not work, so senior people are useless.”

“I tried digital marketing and it did not work, so marketing does not work.”

“I hired a consultant and got nothing from it, so consultants add no value.”

“I joined a platform and it disappointed me, so I am better off doing everything myself.”

A disappointing answer does not invalidate the question. If the original problem still exists, walking away from one unsuccessful solution has not solved anything. It has merely brought you back to where you started. This is where I believe many MFDs need to think much more deeply about the idea of a platform.

What exactly is a platform?

A logo? A common software? A dashboard? A CRM? A conference once a year? A WhatsApp group? A few training sessions? Some marketing material? A fashionable presentation about artificial intelligence?

None of these things, by themselves, transform a business.

Technology matters enormously so will AI. Data matters. Software matters. Processes matter. However, let us not confuse tools with transformation.

You can give two MFDs the same CRM, the same software, the same AI tools and the same investment products, and five years later one may have built an extraordinary business while the other remains almost exactly where he started.

Why?

This is because software is leverage. It is not leadership. A software will never transform your business. Exceptional people can.

Technology can make an excellent person dramatically more productive. AI can give a thoughtful financial professional extraordinary leverage. Systems can help an organization deliver consistently. Data can reveal opportunities that intuition might miss. None of them though can substitute for capability.

A CRM cannot recruit your next great relationship manager. Software cannot have the difficult conversation with a senior employee who is not performing. A dashboard cannot create a world class culture of care. AI cannot magically turn an average manager into an exceptional leader. Technology cannot decide which city you should enter, whom you should hire, what your positioning should be, how you should build your second line, how you should create accountability or how you should prepare your business for succession.

Those are capability problems and capability comes from people. This is the missing question when evaluating any platform, partnership or collaboration. 

Do not show me what technology you have. Show me what capabilities you can add to my business. Show me what you have already built. Show me the businesses you have helped transform. Show me the quality of people around the table. Show me whether you understand recruitment, leadership, sales, marketing, client experience, operations, analytics, technology, governance and succession. Show me whether you have built these capabilities inside your own organization before promising to build them inside mine. Show me the depth of your leadership team. Show me whether your organization itself is dependent on one individual. Show me whether you can attract people better than the people I can attract on my own. Show me whether joining you expands what is possible for me.

This is a very different due diligence process from asking: “Who else has joined?”

This brings me to the first mistake my Pune friend made. He borrowed conviction from other people’s decisions. Ten respected people had come together. Therefore, joining felt safe.

Remember and write down somewhere: Ten successful people coming together and promising something is not due diligence. At best, it is a signal worth investigating. It is not the investigation. You do not know why they joined. You do not know what problem they were trying to solve. You do not know whether their business resembles yours. You do not know whether they themselves have done sufficient due diligence. Most importantly, you do not know whether the people building the platform possess the capabilities required to fulfil the promise being made.

Never outsource a strategic decision to the reputation of the people who made it before you.

This happens constantly in investing too. A famous investor buys a stock, so everybody assumes the stock must be good. You do not know his purchase price. You do not know his time horizon. You do not know his portfolio. You do not know his thesis. You do not know when he intends to sell.

You know only that he bought and you borrow his conviction without borrowing his understanding.

MFDs can do the same thing with business decisions. If five large MFDs join something, the sixth assumes somebody must have figured everything out. Maybe they have. Maybe they haven’t.

Crowds can outsource thinking surprisingly efficiently.

Now comes the second mistake, and I believe this one can be even more expensive.
The first experience disappointed him, so the pendulum swings completely in the opposite direction “I will do it myself.” There is something emotionally attractive about that sentence.

I understand the attraction of those words. There is something wonderfully liberating about them. No dependency on anybody. No revenue share. No platform fees. No promises that may not be delivered. No waiting for somebody else to execute. Most importantly, no possibility of being disappointed by somebody again.

I will control everything.

Before you decide that independence is the answer, ask yourself one uncomfortable question:

What has really changed though for me and my business?

Think about why you joined the platform in the first place. If you joined because you were struggling to recruit exceptional people, have you suddenly become exceptional at recruitment? If you wanted better technology and a world class client experience, have you now developed the capability to select, integrate and use technology better than before? If you wanted help acquiring larger and better clients, what new client-acquisition engine have you built? If you wanted stronger marketing, who is going to build it? If everything in the business depended on you earlier, how does going back to doing everything yourself solve that problem? If you wanted a growth partner, who is now going to help you with it. If you needed stronger leadership, where will that leadership come from? If you wanted succession, has succession suddenly become unnecessary? If you wanted to create an institution rather than remain a founder-led practice, what exactly is your new plan for building one?
These questions matter because there is a huge difference between independence and capability. Being on your own gives you control. It does not automatically give you capability.

You can own 100 per cent of something that remains completely dependent on you. You can keep 100 per cent of your revenue while leaving enormous amounts of future revenue unrealized. You can save 20 per cent and lose 500 per cent of the opportunity to become what you could have become.

This is not an argument for joining a platform. It is an argument against lazy thinking. If you can build strong leadership teams, excellent processes, differentiated client experiences, sophisticated technology, powerful acquisition engines, clear succession plans and the ability to attract exceptional talent, you can be on your own. 

Wonderful.

There are also many MFDs who say, “I want to remain independent,” when what they really mean is: “I want to remain comfortable.”

Independence sounds noble but sometimes independence is simply another name for refusing to confront the capabilities you do not possess. 

Once you understand that, you can make a rational decision.
Build… Buy… Partner… Collaborate… Join.

There is no universally correct structure. There is only the structure that gives you the capabilities required to build the business you want. This is where I think the entire platform conversation in our industry needs to mature.

Do not begin with the platform. Begin with your ambition.

Where do you want your business to be ten years from now?
Don’t think next year… Think ten years.

How large do you want it to become? What kind of clients do you want to serve? What should the client experience feel like? How many exceptional financial professionals will you need? Who will recruit them? Who will train them? Who will manage them? Where will your next Rs. 500 Crore or Rs. 1,000 Crore come from? What will technology do? What will AI do? What should AI never do? Who owns sales? Who owns client experience? Who owns analytics? Who owns compliance? Who builds your leadership team? What happens when you want to slow down? What happens when your children do not want to enter the business? What happens when they do enter but are not ready to lead it? What happens when your best employee leaves? What happens when the business becomes too complex for one founder to manage?

The most important question: What are you personally doing today that you should no longer be doing five years from now?

Once you answer those questions, you stop evaluating platforms emotionally. You start evaluating capabilities strategically. You no longer get impressed because somebody says “AI” twenty times in a presentation. You ask what AI has changed inside the business. You no longer get impressed because ten well-known people have joined. You ask what measurable capability those people gained after joining. You no longer get impressed by a beautiful dashboard. You ask whether it helps your people make better decisions. You no longer ask only what percentage of revenue you must share. You ask what additional value can be created with the revenue you retain.

The last point is especially important.

Entrepreneurs naturally focus on cost because cost is visible. Capability is harder to see.

Suppose you earn Rs.2 Crore and somebody asks for 20 per cent. You immediately see Rs.40 lakh leaving your pocket.

Painful.

Suppose the capabilities you gain help you build a Rs. 8 Crore revenue business over time instead of a Rs.4 Crore business you might have built alone.

What was expensive?

The 20 per cent or the missing capability?

Of course, the opposite can also be true. If you are paying 20 per cent and receiving little beyond software you could have bought yourself, then you should question what you are paying for.

That is precisely the point. Price is meaningful only in relation to value.

Do not pay 20 per cent because somebody has famous names on a slide. However, do not refuse to pay 20 per cent merely because you want to keep 100 per cent. Ask what the partnership allows you to become. There is an old entrepreneurial trap hidden inside the sentence, “I can do this myself.”

Of course you can. The founder can do almost everything himself. He can meet clients, hire employees, check transactions, select software, supervise marketing, conduct reviews, handle complaints, train people, negotiate with vendors and approve expenses.

That is how most businesses begin.

The question was never: Can I do it myself?

The question is: Should I still be doing it myself?

An even better question is: What could I build if I had exceptional people doing these things better than I ever could?

This is a completely different way of thinking. The greatest businesses were not built by founders who discovered how to do everything themselves. They were built by founders who became extraordinary at assembling capabilities.
People… Capital… Technology… Culture… Processes… Distribution… Leadership… Judgement.

The founder’s job gradually changed from being the person who did everything to the person who made sure everything important could be done exceptionally well.
That is the journey from a practice to a business and eventually from a business to an institution/ enterprise.

I asked the MFD from Pune the question I believe every MFD who has been disappointed by a platform should ask before deciding what comes next.

“Why did you join in the first place?”

Forget the platform. Forget the people who joined it. Forget the noise. Forget what happened later.

Why did you join?

What were you hoping your business would become?

What could you not do then that you believed the platform would help you do?
Which of those problems have disappeared? Which remain? What capabilities do you now possess that you did not possess before? Additionally, for the capabilities you still do not have, what is your plan?

These questions matter far more than whether you join another platform or decide to remain independent. 

There are two very expensive ways to avoid thinking. The first is following the crowd. The second is reacting against it.

One says: “Everyone smart is joining, so I should join.”

The other says: “That did not work, so I will never join anyone again.”

Neither is strategy.

Strategy begins when you stop asking what everybody else is doing and become brutally clear about what you are trying to build. The first platform was wrong for you. You left it. However, there is a world-class organization somewhere that can give you access to people, technology, processes, leadership, knowledge and capabilities that would take you fifteen years to build yourself.

Explore it but do not choose any of these paths because of noise, fashion, disappointment, ego or the comfort of doing what you have always done.

Choose based on the future you are trying to create. It’s because the biggest risk for MFDs is not joining the wrong platform and trying to do on their own. The biggest risk is spending the next ten years building the same business you already have, while believing you made a strategic choice.

My Pune friend began our conversation by saying: “I was on my own for so long. Then I joined a platform.” The next sentence should not be: “Now I will go back on my own.” It should rather be: “This time, before I decide where to go, I will decide what I am trying to build.”

This is where the real decision begins.