Searching for the right platform

There has been much written about the criteria for choosing a platform and many of the questions proposed are obvious: how many funds can I access, when is commission paid, what administration services are offered, does the platform offer me the capability to improve my business model, are there sufficient tax wrappers, what asset allocation tools are available and so on. In fact, the number of questions you could ask are limited only by your imagination.

Of course, the platform services must be valuable to your clients, and so some of the client-facing issues should be taken as read, that the enhancement to the services your firm offers or is seeking to offer justifies the costs of the platform, that compliance issues are addressed and that reporting and access are adequate.

So, partially as a sleight and partially to avoid repeating much that has been written before, this should be approached solely from a different angle. It is possible to create an exclusion process with a few questions which absolutely, and without exception, must be answered positively.

It is possible to try and pose one question, from each of five core business areas, regarding the services of a platform which can only be answered yes or no. A failure to respond positively to any question should exclude that platform from further consideration.

Implementation

One piece of research indicated the average adviser had funds under influence of £30m.

If you and your colleagues are going to entrust a sum perhaps in excess of £100m to a platform, then it is entirely reasonable to ask what assistance they will offer. This is a mutually rewarding business partnership and both benefit from making it happen.

While some actions must be your responsibility – a platform cannot give advice on your behalf – others actions may reasonably be shared with the platform. But the process of defining an investment process, contacting clients, completing transfer instructions, reregistering or disposing of inappropriate or legacy holdings are procedures with which a business partner may choose to assist.

The movement of client assets to a platform is a project that should be managed by all involved. It is entirely reasonable to ask: “Will you appoint a project manager to assist my firm through the implementation process?”

Transparency

Cost transparency is a key client justification in the use of platforms and must be embraced as part of the move to the new business model.

The concept of factory gate pricing, whereby the costs paid by the clients are directly attributable to the recipients of the services being supplied, is extremely powerful and probably inevitable. It is a huge advance from times when commission was concealed within the calculations of life company actuaries.

As an extension of this ethos, platforms must be fully open as to their sources of revenue. It is not acceptable for platforms to conceal their own charges by negotiating rebates with underlying fund managers.