Platform due diligence requires insights not hindsights

6 July 2010 0:00 am | Updated: 6 July 2010 5:24 pm

In the early noughties, IFAs bought platforms on cost and possibly the number of funds available that they recognised: 2,000 funds being seen as better than 1,000. When really the deeper question is, are the 50 funds which underpin my investment offering available?

This changed somewhat when passive and ETF’s became more popular. Once, the formulae for popular platforms had a high bias towards planning tools being provided by the platform operator.  This too was debunked and its weighting in selection processes has reduced substantially.

With the FSA demanding that IFAs have a greater understanding of both platform suitability and compatibility with their chosen client segments, the quality of the requests for information has increased to such a level that brochures are no longer sufficient.

More now than ever, IFAs are demanding to meet face to face with wrap operator sales and marketing staff to understand what a ‘yes’ or ‘tick’ actually means to them and their clients. A simple example is model portfolio functionality.  A ‘yes’ could mean anything from: ‘yes and free’, to ‘yes, but for an extra charge’, and ‘yes but not equities’.

Inexperienced staff may not be able to give the necessary insights, or have the relevant platform experience to help bridge the ‘confidence/future development gap’ that all IFAs must negotiate to some degree when starting on the transition journey to RDR nirvana.  

Quality, experienced, well educated IFA staff are crucial to a successful platform implementation.  The same is required from wrap operators, if only to make the due diligence experience more engaging and enlightening.  

 

Shaun Sandiford is distribution director at AXA Elevate

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