Economies of scale and agility are vital for platform providers to have in order to have the ability to help leverage off a cost base and improve negotiating positions, according to IOOF.
Head of platform products, Chris Weldon, said economies of scale also enabled platform providers to adapt in an agile way to customer needs as the business grew.
"Agility is something that can often be quite easy to provide as a small provider, you can do anything for anyone and any customer that comes in and you can offer different services," Weldon said.
"But it also then becomes an Achilles' heel for a business over time as the systems then become more complex as you introduce different features and different ways of doing things for different customers."
It would be easier for smaller players to provide more services for few people but managing complexity as the business grew larger would be challenging, Weldon said.
"What we're hearing from our customer base is it's not so much about the breadth of the features that you offer; it's doing the core capabilities really well," he said.
"So you can do this role but if it takes two weeks versus the same day, well that does make a difference."
An Investment Trends platform report found smaller players such as HUB24 and netwealth took first and third place for platform functionality such as efficient administration, good investment menu, good online functionality, being cost effective for clients, and good reporting tools.
Wealth management head of research, Recep Peker, said: "netwealth and Hub24 set themselves apart on their direct shares capabilities, portfolio management tools, and also BDM [business development manager] support that they provide".
He added that larger players such as Colonial First State FirstChoice, Macquarie Wrap, and IOOF Pursuit platform were not far behind.
"The platform market is very competitive. They both have different strengths but also similar strengths," Peker said.