More on Technology for Advisers
The topic of platforms is currently a pertinent one within the intermediary market. To date, the majority of advisers will have adopted a single platform approach. However, the FSA has made its stance clear. If you are using a single platform, you must be able to show that it caters for the needs of all your clients.
In the FSA’s factsheet for financial advisers on platforms it states: “The suitability of any platform will depend upon the client’s particular circumstances and requirements. Irrespective of any strategic firm decisions to use a platform, you must still consider whether a platform is suitable and meets each client’s needs before recommending it. This includes recommending that existing clients move onto a platform.”
The FSA believes that it would be very rare, if not impossible, to only offer access to one platform and retain your independent status. This explains why the FSA has already written to some adviser firms asking them to validate the use of a single platform for all their clients. As it is expected that the majority of advisers will remain independent rather than adopt restricted advice status post-RDR there is likely to be a lot of activity in the coming weeks and months, with advisers considering how many platforms they need and who should fill these vacancies.
In order to understand how many platforms you will need going forward, the first step is to segment your client base. You may want to seriously considering adopting two or three platforms to minimise the need to go off platform for recommendations. In the FSA’s guidance consultation “Independent and restricted advice” the regulator stated: “A firm can use platforms in providing independent advice but needs to remain aware of the limitations of its chosen platform and advise ‘off platform’, or through another platform, where this is best for the client.” It is therefore important to conduct a thorough assessment of your client bank.
You may have aspirations for your business to serve the high net worth end of the market only but a realistic assessment may indicate diversity across many different metrics from wealth, attitude to risk and investment choice. If you assess your client bank and come to the conclusion that your client’s needs do vary then this would point to the need for a multiple platform strategy. Only if you are willing to no longer service particular clients or you can prove that you have a highly segmented client base, can you continue to operate a single platform strategy. If you do decide to follow a single platform strategy you will have to evidence that this represents best advice for all of your clients.
After evaluating your client base you are now in position to consider how many platforms you will need to provide independent financial advice. A key consideration when considering adopting a new platform is to look at the investment choice on offer and whether this will cater for all or a segment of your clients. Central to any platform offering from an advised perspective is the fund proposition. Platform providers can often become fixated with numbers with providers claiming to offer over 1000 funds or 2000 funds. The reality is that advisers are likely to select from a much more restricted range of 50 to 100 preferred funds across relevant fund sectors and therefore accessing the best terms for these funds becomes more important.