The recent announce-ment that the FSA was to fine a firm because of its advice failings when using a plat-form will produce sharp intakes of breath among many firms.
While the FSA has made no secret of its increased attention on the platforms adopted by advisory businesses, this is the first time that a heavy sanction has been applied. Speaking at Aifa’s platform seminar on the day that news broke, a leading FSA figure stated that he hoped this was the last such measure that would be needed. It is just because of this increased regulatory attention that Aifa has published a due diligence guide for members on how to make the right decision when assessing if a platform-based approach is right for their firm and how to go about the selection process.
This new guide details the key stages in making sensible business decisions. It starts from the fundamentals of what type of business you run today – and your strategy for tomorrow. These are essential questions that need to be answered before determining if a platform app-roach will help improve client service and cost efficiency.
Next steps look at how to make a prudent evaluation of what it would take for your business to move to a platform – and then the different types of platforms available.
’Firms that move to platform – based models need to ensure their advisers are properly trained and they are supported by adequate compliance’
The guide looks at critical areas such as how to implement a platform into the business. There are HR, training and culture issues that need to be addressed in this measure – it is far more than a new business process or a piece of new software. Adopting this model may mean changing the attitudes and behaviour of advisers and support staff alike.
The secret of successful platform adoption is that it must make sense for the client – as well as the business. This means that a client transition plan must be worked out and addressed over a period of time.
This means the business may have to manage those who are deliberately outside, as well as those making the transition to, the platform. The firm may also decide that they need more than one platform – perhaps as many as one per client segment.
The report is an impartial guide to help members make tough business choices – and then have the audit trail necessary for when the FSA visit.
FSA’s director of enforcement Margaret Cole has said: “Firms that move to platformbased models need to ensure their advisers are properly trained, they are supported by adequate comp-liance, that cust-omers have a full understanding of where and how their money is being invested.” For those unsure of the answers to these questions, this new guide is an ideal starting point.
Andrew Strange is a director at Aifa