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Platforms adding needless tools in ‘paranoid’ bid for survival

Experts claim platforms are “running scared” and creating investment research tools that advisers do not want out of “paranoia” in a bid for self-preservation at Money Marketing Interactive today.

The Lang Cat consulting director Steven Nelson says it is not surprising platforms keep adding investment tools that many advisers would prefer to buy in from other trusted sources given the dire warnings over consolidation in the platform sector.

He says: “There are 20-25 platforms who are consistently being told that in the future there will only be four or five, so it is not surprising they are in a battle to differentiate themselves.”

However all the panellists agree with Nelson that the predictions of consolidation have been overstated and it is important for competition that a large number of platforms survive.

Fundscape chief executive Bella Caridade-Ferreira says: “I think a lot of platforms are running scared and adding tools that they think will appeal to clients. Some of them do it well some of them do it badly.”

She says advisers will increasingly demand the ability to use the particular tools from third-party providers that they prefer and that ultimately open APIs could help to see these functions added to an IFA’s chosen platform.

Pilot Financial managing director Ian Thomas who has worked for several platform providers in the past says: “I’ve been on the other side of the fence and there is a lot of paranoia around businesses becoming commoditised so they are trying to differentiate and there is a lot of talk about the need to control the adviser’s desktop.”



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There are 4 comments at the moment, we would love to hear your opinion too.

  1. Old news guys. RSMR has been saying this since 2010 and at what cost! Also, where do you get your numbers from on platforms in the market 20-25. No way!

  2. Platforms seem to forget their Raison d’etre. They are a utility. Too few still don’t offer a full range – even investment trusts are not universal. If a platform doesn’t offer all available regulated funds it is in effect impinging on the advice process.

    As for these risk questionnaires – just a box ticking exercise. The only real way to assess risk is to have a comprehensive discussion with a client and then capacity for loss is paramount. may is the time I have come across clients who had completed a questionnaire as a lower risk candidate, only to discover they had a direct equity portfolio with a stockbroker. On the other hand I had clients whose risk profile was off the scale. My response was to suggest William Hill rather than and IFA.

    Model portfolios are also a bit of a farce. Do you have two clients exactly the same? It’s lazy investing. These models are more for the convenience of the adviser than a benefit to the client. Bespoke is the proper way to go.

    What platforms should do is to add a column to the valuation and next to each holding itemise the fund management cost. On the bottom line you can then have the total to which the platform fee can be added and finally the adviser charge. I have been pleading for this for years. Now with MIFID ll it becomes essential.

    They could also have a column showing the volatility rating for each holding. This rating could then be multiplied by the value to provide a factor. All the factors can then be totalled and this total divided by the total portfolio value to provide a median volatility rating for the portfolio. This can then be matched to the box ticking risk rating number to provide a very rough mathematical confirmation of the risk rating of the portfolio. (Yes I know that volatility is not an infallible measure of risk – but it’s better than nothing)

    These are some useful innovations that platforms might consider instead of the useless stuff they offer.

  3. Wouldn’t it be nice if they all just focused on good pricing, paperless processes; full investment range and spectacular service- couldn’t be that hard to please us and get customers- don’t need bells and whistles. I do like the technical support as well- often much appreciated.

  4. We want (what I see as) very limited things from platforms…

    Cost effectiveness.
    Full suite of tax wrappers.
    Full suite of funds.
    Intuitive admin (minimal paper, simple application process, bed and ISA, crystalisation, pre-funding etc etc).
    Sensible reporting (Tax, money in, money out, gains)
    Minimal limitations
    Knowledgeable ‘back office / consultants’ for the tricky stuff we often come across.

    They are a tool to hold and trade assets – anything more is ‘fat’ which clients are paying for and some (?all) don’t need.

    Apparently that list of ‘wants’ is tricky for the majority of platforms!

    Having said that, good to see downward pressure in the market is starting to materialise.

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