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How do advisers view platforms in 2014?

This article is part of
Adviser Technology - November 2014

“Financial strength is still a major priority due to high costs of moving to unbundled share classes and the future costs impacted on platform providers.”

Mr Lindfied said that the firm reviews its platforms annually, and pretty much carries out the same due diligence process albeit in some parts “a little toned down.”

James Priday, director at Prydis Wealth, said that the firm currently runs a branded version of Ascentric, and also Skandia, Fidelity FundsNetwork and Standard Life.

He said that Ascentric has become the main platform over the last couple of years, predominantly because of its truly open architechture, and the vast investment flexibility that allows the firm to carry out its discretionary investment activities, which is an increasingly important part of the business.

FCA expectations and due diligence

Matthew Brown, executive and retirement services director at Broadstone Wealth Management said the Financial Conduct Authority is very clear in its views on what it expects from advisers.

Mr Brown said: “It expects firms to know who their clients are, the type of new clients they are targeting and know the services it is providing.  It then expects firms to select a platform that is appropriate for the services being offered to that type of client. 

“Having a well-defined proposition and business plan is an essential part of explaining to the regulator (should they ever ask) how you chose the platform(s) that you use.”

Interestingly, he added that the regulator has a view that it is unlikely that a single platform would be suitable for all types of clients a firm will work with, which he believed was reasonable.

Mr Lindfield said that the choice of platforms to use is a strategic business decision and not dependent on any one factor such as cost. He agreed that as an independent firm, you would be expected to consider whether the use of a single platform would be appropriate for the client base.

Mr Brown also said that due diligence must start from an adviser of firm’s defined proposition. “Best practice makes use of both third party and in house research.  It is important to ensure that the rationale behind platform choice is clearly written down so it is readily available if the decisions are ever challenged.”

Mr O’Brien said that the FCA expects that the platform used does actually benefit the clients first and foremost and that Aurora’s due diligence procedure is based on price/service and client functionality and focused on client outcomes.

Mr Lindfield said of the due diligence process that if done properly, it is suitable but involves a lot of time.

“For smaller firms, this is a lot of due diligence to carry out and review annually, particularly if you want to include site visits, the beauty parade interviews and selection process. However, there are tools and compliance support providers than can greatly help by providing the groundwork including platform fact sheets, and templates and platform questionnaires.”