Survey rates platforms for financial strength

20 January 2011 | By Natalie Holt

Axa Wealth, Transact, Skandia and Standard Life have been rated as the financially strongest platforms on the market by Defaqto.

The ratings, which were compiled by AKG Actuaries & Consultants, show it is not necessarily the biggest firms that can achieve the best financial strength ranking. They are based on taking a view on a platform’s ability to survive in the long term and deliver on expectations. They include factors such as business strategy, finances and how the platform is run.

Axa Wealth, Transact, Skandia and Standard Life were all scored as B+, which is equivalent to very good financial strength.

Bigger platforms Cofunds, Fidelity FundsNetwork and Aviva Wrap scored a financial strength rating of B or good, the same rating as Ascentric and Nucleus.
Novia and James Hay ranked as B-, the equivalent of satisfactory financial strength.

AKG managing director Guy Vanner says: “The financial strength of a platform provider is a primary consideration for advisers. There is a need to avoid, as best possible, the operational complications and potential brand damage that would be incurred if a chosen platform should encounter any financial difficulties or in some other way fail.”

Yellowtail Financial Planning managing director Dennis Hall says: “You want to know that your platform is going to stay around. If platforms are set up as separate entities but the parent company has got deep pockets, then this is less concerning, but providers can withdraw from the market without warning, so financial strength is critical.

“The last thing you want is your clients’ assets floating around waiting to be transferred because your chosen provider has decided to close.”

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