The introduction of the retail distribution review at the start of the year heralded a big change for the financial adviser community and a shift in attitude.
The move from commission to adviser charging and the push for greater transparency has meant many advisers have been placed under great pressure to prove their worth to clients.
This, in turn, has prompted a growing interest in platforms amid their ability to offer consistency, efficiency and a wide range of investments.
As well as offering a cost-effective solution for advisers and investors, platforms were borne out of a desire to address clients’ investment needs from one place, by enhancing client communications.
At present there are around 30 platform providers in the market, with further growth opportunities on the horizon.
With a healthy amount of providers available to choose from, advisers have a long list of boxes that need ticking. They must consider the range of products available, the charges involved, the standard of service, fund choices and of course the security of the platform.
Selecting the right platform for your client’s needs is no easy feat and advisers should be investing a lot of time and effort to ensure they have made the right decision.
However, with the onslaught of RDR forcing advisers to choose between independent and restricted advice, there was much talk about what constituted the former and many advisers were left unsure if using only one platform would compromise their independence.
The FCA has already made clear that as the number of propositions in the market continues to grow, platforms must offer the full range of investment vehicles if they are to be of use to advisers who have gone down the independent route.
The FCA accepts that if you have a very defined client base, for example they are all over the age of 60 and have £100,000 minimum investment available, then it is perfectly acceptable to use one platform for all Isas and general investment accounts. In fact, the same platform may even be suitable for pensions if they have a competitive Sipp with drawdown and the flexibility to deal with clients’ requirements. A large proportion of independent firms tend to gain new clients through referrals from existing clientele which may have comparable circumstances and therefore be seeking similar products.
However, the FCA believes this sort of situation is not going to be too common and that most IFAs will have a mix of client types with different aims.
The FCA has stated that it finds it “likely to be very rare, if possible at all, that a firm could use one platform for all clients and meet the independence rule.”
Indeed, the FCA has said that a firm that wishes to do so would have to find a platform that offered a range of products covering the whole of the packaged product market. Furthermore, it would need to keep this range under continual review to ensure that it remained whole of the market.