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What software helps you find your platform match?

Ian McKenna
Ian McKenna

Over the last few months, an increasing number of software packages have emerged to help advisers in comparing the cost to consumers of using different platforms.

Capita’s Comparator system was recently demonstrated around the country in a series of roadshows and the adviser assets system (see www. adviserasset.co.uk) offers advisers the ability to compare the charges from a range of different platforms. There is also Skandia’s free Platform Watch service.

In addition, this are offers a major opportunity both to the main pension transfer analysis systems Selectapension and O&M.
If an adviser is going to compare all the options in a pension consolidation process, considering the platforms must now be a key option to bear in mind.

I have not yet had the opportunity to compare the platform-related functionality of all these offerings but such a project is high on my to-do list and a summary of my findings will appear on these pages in due course.

In the meantime, I believe there are some valuable questions to ask about what is the best role for such services.

Research systems are nothing new, Synaptic and Defaqto have been offering services for years and if these new solutions deliver a way for advisers to document more clearly to clients the full charges involved in a platform then, used cautiously, they may have much to offer.

Equally, it has long been widespread practice for life offices to have large teams of people reverse-engineering both the main product research systems so their broker consultants can encourage advisers to focus on the features which put their particular product at the top of a league table.

I am already hearing stories of similar behaviour in the platform market. I think it would be a shame if the use of these new services degenerated into a game of who can best argue their features in a way that, to some extent, undermined the value of such services in the life and pension arena.

I understand the FSA is due to due to deliver its draft rules on the platform sector before the end of next month, with final rules before the end of the year.

Until these are delivered, many questions remain open but even before the regulatory framework is confirmed, impartial plat form comparison services should be a valuable aid.

I see a strong case for having an objective way for advisers to use technology to demonstrate the true cost of dealing with not just platforms but any form of investment provider. Indeed, I think we have probably reached the stage where a product comparison tool needs to consider both life and pension and platform assets in a single process to document a customer’s options comprehensively.

A platform comparison system that does not look at life offices could be accused of only looking at part of the market and the same is true of a life and pension system that does not include platforms.

But, to be clear, I think it is important to understand what such systems are best used for. These services should have a very valuable role to play in the disclosure process but I question if they are the best way to define overall suitability.

Is the role of such services to identify on a case-by-case basis which platform to use or are such systems better employed as the equivalent of a quote portal for platforms in a similar way to how The Exchange and AssureWeb are used to obtain key features documents for pension and investment business?

If such services are to be used to identify which platform to use for each individual client, then I see risks for consumers.

From some of the early outputs I have seen, such systems can produce significantly varied result by changing just one or two variables.

This suggests that advisers might start switching clients from platform to platform on a regular basis as a result of relatively minor changes.
In practice, this would almost certainly generate more costs than it would save.

Given the range of different variables that might apply at any given time, investment choice, objectives, contribution levels and many more, as well as the frequency with which such variables can change, makes selection on pure cost grounds is highly questionable.

Choosing the right platform is more a business-level decision between platform operator and adviser. To meet the challenges of the market after the RDR, advisers are going to have to define their customer propositions clearly and deliver these in far more consistent ways than many firms have achieved previously.

Platforms are ideally suited to help advisers in segmenting their service offerings to different segments of their customer base.

Used wisely, price comparison services can have much to offer but, as the protection market has found, overly focusing on price can all too easily lead to a market where it becomes the dominant factor to the detriment of service and quality.

The platform community has thrived in no small part as a result of advisers’ desire to deliver a better proposition to their customers.

It will be a retrograde step if, in trying to achieve more effective comparisons of cost, we end up in a situation where the platform communitybecomes unduly focused on cost rather than value and quality.

It is important to have a full debate on how best these tools can serve advisers and consumers.

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Comments

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

  1. “A platform comparison system that does not look at life offices could be accused of only looking at part of the market”

    Totally agree – and could miss some of the inherent strengths of that sector e.g. well capitalised and sustainable (in some cases) unlike many platforms who are chasing volume through pricing that probably isn’t sustainable in the long run.

  2. colin fergusson 25th August 2010 at 6:33 pm

    Our experience is there is no system which has tackled this issue. In fact we have recently stopped using Adviser Asset as it was noted the out-put was too poor quality and overall confusing.

    It is time that all companies provided the same informatrion ina consistent way. Also it is time that comparison sites allowed complete transparency.

  3. AdviserAsset is a free service to IFAs and now has over 6,000 IFA and paraplanner users. It’s a system designed by IFAs for IFAs and as such, we believe that it is your system. We also believe that this information should be made available to you free of charge.

    We have had a substantial volume of unsolicited positive feedback from IFAs and a program of continuous improvement based on constructive suggestions.

    Obviously, non-specific comments like the above made under the cover of anonymity are not helpful in moving your system forward, but if the individual concerned would like to contact us directly (www.adviserasset.co.uk) we will be happy to listen and respond.

  4. AdviserAsset is a free service to IFAs and now has over 6,000 users. It’s a system designed by IFAs for IFAs and as such, we believe that it is your system, to be shaped by you. We also believe that platform charge information should be made available to IFAs free of charge.

    We have had a substantial volume of unsolicited positive feedback from IFAs and a program of continuous improvement based on constructive suggestions.

    Obviously, non-specific comments like the above made under the cover of anonymity are not helpful in moving your system forward, but if the individual concerned would like to contact us directly (www.adviserasset.co.uk) we will be happy to listen and respond.

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