When and how to switch platforms

This article is part of
Guide to running your business

When and how to switch platforms

An adviser platform is a critical part of an IFA’s business; so much so that if a platform suffers serious problems, the consequences can be very serious for the platform.

A troubled platform migration in 2018 left Aviva advisers facing problems for months.

Aegon is another company, whose platform issues have been well documented, following the acquisition of the Cofunds platform in August 2016.

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After attempting to move Cofunds’ client base onto its own platform this resulted in a wide range of issues, with clients unable to access basic functions on the site for months. 

By June 2018 efforts to solve the issues had cost the company an additional £3m.

These two high profile examples still raise the question of what approach advisers should take when picking a platform.

Mike Barrett consulting director at the Lang Cat says the most important thing for an adviser is to think about what they want the platform to be doing.

“There’s no right or wrong with this,” Mr Barrett says.

“Some advisers will want a full feature platform. Others are happy to have no bells and whistles, no frills or maybe a mixture of both.”

A survey by the Lang Cat in November for its annual State of the Adviser Nation report found that 80 per cent of respondents had over the last year considered making changes to where they place platform business.

But only 8 per cent could be lured away by the potential of an attractive proposition elsewhere, while for 18 per cent, poor experience with their existing provider forced them to contemplate a change.

When it comes to switching platforms, difficulties remain.

But upcoming FCA plans could change this.

The FCA is introducing a package of rules that introduce requirements for platforms to: 

  • Offer consumers the choice to transfer units in investment funds that are common to both platforms via an in-specie transfer 
  • Request a conversion of unit classes, where this is necessary to enable an in-specie transfer to take place 
  • Ensure that consumers moving onto a new platform are given an option to convert to discounted units, where these are available for them to invest in

The FCA says the intention of the new rules is to complement the existing rules on transfers and re-registration and help make it easier for consumers to move their assets from one platform to another. 

The regulator adds: “In turn, we expect this along with the other remedies in the investment platforms market study (IPMS) to improve competition in the sector, increase efficiency and improve the consumer experience. 

“We consider that overall this will help us to deliver public value through a better functioning retail distribution sector.” 

In March 2019, the FCA’s IPMS final report found that customers found it difficult to move from one platform to another because of the time, complexity and cost involved, a sentiment not dissimilar from what advisers experience when they use platforms.

Kevin Okell managing director at Altus says: “If I was an adviser looking at a platform, I would want to understand; do they have service levels around transfer times and what’s the typical time it takes to move assets.”

One of the possible reasons an adviser might move from one platform to other, might be because the platform has negotiated a better AMC on a particular fund.