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How to pick an investment platform

This article is part of
Guide to Picking a Platform Post-RDR

There are a number of considerations an independent adviser should take into account when choosing platforms.

Mark Polson, principal of platform consultancy The Lang Cat, says these should include: the available range of wrappers and investments; financial stability and profitability of the provider; the price; fit with the adviser’s client proposition; whether there any deals on the platform provider’s own fund range; usability; client reporting; and functionality of the service.

To ensure the service is right for your business, he adds that advisers need to make sure it’s best for their clients.

“Clients and their needs are at the heart of the business, not the platform. The proposition clients expect from their adviser should be facilitated by the platform; it should bend to them, not the other way around.”

Shaun Sandiford, business development director of Axa Wealth, agrees that comprehensive due diligence is imperative when choosing a platform.

Although the now-extinct regulator the FSA said it was “doubtful” an adviser firm could use just one platform all of the time for all of their clients, Mr Sandiford believes the opposite is possible.

“In reality just having one platform should suffice, as long as the functionality meets the adviser’s and their clients’ needs, but, practically, more than one should ensure complete coverage.”

Terry Huddart, technical communications manager at Nucleus, notes that the regulator suggested that use of a single platform was acceptable for the majority of a firm’s clients, subject to individual client suitability.

“Given the significant strategic investment that aligning with a platform involves, advisers are increasingly taking more control and can de-risk platform selection by making sure their chosen platform or platforms can align with the challenges they face.”

Mr Polson agrees that one platform can fit the bill most of the time, but stresses that any unsuitable business would have to go off-platform.

“It’s impossible for an independent adviser with a diverse client base to use one platform all the time.

“However, it’s perfectly possible to have one lead platform which suits all ‘typical’ clients of that practice, and to have back-ups for outlier clients with, say, very complex or very simple needs.”

Platform due diligence is crucial and advisers should question the platforms on any areas about which they are unconvinced, probe for detail and go deeper to ensure a strong cultural fit with the business.

This includes making sure the firm has met, and has access to, the senior management team, is comfortable with future direction and has a chance to influence things if alignment begins to drift.

It is much the same for restricted advisers, he says. “There will always be clients who don’t fit. What the adviser does with them drives whether they can just use one.”

Restricted advisers can more comfortably use a single platform, assures Mr Sandiford. “But any deficiencies in breadth of offering must be clearly documented from a Treating Customers Fairly perspective.”