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Dear Pat: Top tips on platform selection

Dear PAT,

As Britain settles back into normality after a summer of fun and jubilation, many advisers leap back into action once more, focusing on the RDR and what it means for them.

For most advisers these days, platforms are a part of the everyday practice of looking after clients’ affairs. Whether it is one or multiple providers, there is no getting away from it, platforms make life easier.

The latest research from The Platforum shows platform assets in the UK are just shy of £200bn and growing, with most advisers using three platforms on average. The trouble is that sometimes advisers I talk to are unsure why they are using three platforms, simply claiming it is “what the FSA wants”. My message to these firms is, yes, the FSA has declared one platform is not likely to suit 100 per cent of your clients but firms need to be clear in their definitions on why their chosen platform providers are right for their clients.

PAT’s tips on platform selection

Platform must-haves

What are your must-have platform criteria? This should be measured against each client service proposition. Sophisticated client portfolios with active trading requirements are likely to require different platform capabilities than those who want simple and cheap.

Experience

Assess your previous experience of using platforms in the business. Have they delivered on what they said they would? Did the website work well? Was the fund choice sufficient? What was the service like and, more importantly, what did clients think?

Review

There are currently 27 platform providers with varying levels of service, functionality and cost. The FSA’s factsheet, Platforms: Using Supermarkets And Wraps, clearly sets out what advisers should consider. Who is the provider? What are the terms? What are the charges? Is the range of funds or tax wrappers sufficient? Is the range of asset classes sufficient? What functionality is available?

Shortlist

By weighing up your platform must-haves against each of the providers, you will naturally filter out those providers who do not meet your set criteria, leaving a shortlist of providers for deeper analysis.

Cost

I cannot stress enough the importance of cost, not only in selecting platforms for the business but also at each stage of advice to clients. In my view, once you have a shortlist of likely providers, ask them to cost a sample client portfolio for a more bespoke and realistic indication of what the fees are. Some providers have initial set-up fees, some a flat fee, some are tiered depending on portfolio size and then there are some who charge for transactions/switches and some who do not.

We all know that using platforms brings obvious efficiencies to IFA businesses, so picking the right providers should therefore be a thought-provoking process and one which results in the best bit of kit to deliver the service clients dictate.

I spend every day analysing and researching the platform market. I am happy to share hints and tips with IFAs on each of the platform providers to help with platform selection and due diligence. I am not a computer and I am independent so I will give you my candid views based on what you tell me you need and want.

If anyone would find it helpful to have a chat, there is no cost – do give me a call or send me your worries or concerns by email to pat@theplatforum.com. I promise to reply to everyone individually.

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