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Platform tickets

Tracey Scott reports on why some advisers either use a variety of platforms or are reluctant to use any.

Wrap or platform? Bundled or unbundled? Independent or non-independent? With so many words used to describe the platform area, is it any surprise that many advisers are yet to commit to using one?

But it appears this apprehension is to do with more than words. Investment Quorum chief executive Lee Robertson says many IFAs have been successfully using platforms for years but there are three key reasons why some are yet to follow suit.

He says: “A sizable number of IFAs are not yet confident enough in their proposition to have a charging structure that is not commission-dependant.

“Some are worried about committing to a platform, only for it to close or withdraw like Lifetime or American Express.

“Then there are still a lot of IFAs who are just not very interested in technology.”

Churchill Investments director Chris Gilchrist says uncertainty and rapid changes in platform offerings are key factors in discouraging advisers from using wraps.

Highclere Financial Services partner Alan Lakey says: “It is difficult to move advisers out of their comfort zone. Established practices are hard to shift and few of us like to be torn away from the familiar.”

CBK Colchester Peter Chadborn says: “I think one of the barriers is the initial fear of not being seen as independent if using one provider. But with the FSA’s recent work on platforms and suitability, that fear should no longer be there.”

Chadborn agrees that intermediaries fear nailing their colours to the mast of a particular organisation. He says: “If they mess up, that IFA has a lot of business on one platform.”

The FSA says there is nothing wrong with operating through one platform but an adviser must consider if it is suitable and meets each client’s needs before recommending it.

Robertson says IFAs generally aim to use one wrap but tat it is almost impossible not to have some legacy platform business.

Chadborn uses one platform but says: “I know a lot of IFAs are using different platforms for different business. However, I do not think you will find an adviser using more than two or three at a push.”

For Gilchrist, until the IFA understands the platform market better, using two makes sense. He says: “You get to compare features and functions”.

Lakey says it is simpler to use just one but adds: “Many do not allow the functionality required and often do not have the necessary agreements with all the institutions.”

New reporting tools and asset allocation capabilities are being offered to attract unique users while keeping existing ones.

Lakey says the perfect platform would consist of full functionality, including ease of buying, selling, transferring and an easy means of providing a client report.

It is difficult to move advisers out of their comfort zone. Established practices are hard to shift

For Chadborn, reporting tools are the most important feature when considering a platform. He says: “The tools need to be very simple and streamlined. From a few clicks of a button, I need to be able to understand anything about the behaviours of the portfolio.

But Robertson says: “Some platforms work on accuracy and full investment access whereas others feel the need to offer all sorts of tools and gizmos.

“I am wary of the tools offered by wraps, particularly life company wraps, as they often rely too heavily on stochastic modelling.”

Gilchrist says every intermediary will have a different view on what the perfect platform looks like but he believes “ease of use” and “intuitive interfaces” are going to become more important.

The question remains , will every IFA eventually move on to a wrap platform?

Lakey believes so: “Every adviser who involves himself in the investment/pension field will eventually migrate to one or more.”

Gilchrist says, following the retail distribution review, any whole-of-market IFA will use wraps for their top clients while many will end up using them for all their clients.

Chadborn says: “If any IFA is thinking about selling their practice in the future, it enhances the value of the business because whoever is taking that business on can manage the clients very efficiently if it is on a platform.”

Robertson says the demands of the RDR will push more advisers towards platforms but he adds: “There will always be the odd dinosaur out there.”

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  1. The point that I don’t see mentioned is that in order to make optimal use of a wrap / platform, especially if you hope to tie it into a meaningful asset / wealth management propsition, you probably need discretionary status, not just advisory … and that is going to be a real limitation for a lot of advisers.

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