Following our investigation last week into how advisers are approaching fund selection, this week we move down the value chain to examine platform choice.
Given platforms are such an integral part of an adviser’s business, firms want consistency of outcomes for clients and consistency of service for themselves above all else. And rightly so. Unfortunately for some advisers, given the level of dealmaking we have seen in the platform market over the last two years, a stable platform is but a mirage shimmering in the distance.
This week’s shock ditching of IFDS by Old Mutual Wealth in favour of FNZ just goes to show how even “done deals” can quickly become undone.
When it comes to platform due diligence, there are things that advisers can either objectively measure or that they have an intuitive gut feel for: factors such as cost, usability and service for example. Then there is the criteria that is more intangible. To a large extent, advisers have to take platforms at their word on claims relating to commitment to the market, financial stability and profitability.
One of the findings to come out from our research is the majority of advisers say they have not changed their platform since the RDR came in over four years ago. This may be because of the upheaval involved in moving clients to a new platform, but it may also be down to the fact advisers tend to be adding to their existing platform repertoire rather than replacing it wholesale.
Many respondents say they have not changed platforms because there is no need to – they are happy with their existing provider. The unanswered question is: are clients equally as happy? It is good to see some advisers are voting with their feet. Those who have chosen to abandon their previous platform cite issues such as failure to evolve or simply poor administration coupled with bad customer service (a deadly combination if ever there was one).
Platforms are about custody of assets, but wrapped up within that they are about delivering an efficient service for advisers together with providing a jumping off ground from which clients can engage with their investments, and with their adviser. Service and the fundamental ability to work properly are key facets of a platform proposition. If your platform is not delivering on these most basic of principles, you have to question what your client is paying them for.
Natalie Holt is editor of Money Marketing