Platform price is key to selection

Platform price is key to selection

Advisers continue to select platforms based on their price despite the convergence of levies in the past three years, according to research by AdviserAsset.

However, the average price difference between number one and number 10 in a price comparison is two to three times a typical base platform charge, platform market analysis to February 2017, conducted by the research and consultancy firm, found.

It adds that the increasing uniformity of platform charges is attributable to a host of factors including fund price sensitivity, fund deals becoming less exclusive and platforms adjusting their base platform charges.

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The research took into account a host of data metrics including 55,000 charge comparisons undertaken by advisers on the basis of total cost of ownership.

The analysis is also based on 2,100 adviser confidence surveys and 5,000 due diligence requirement specifications prepared by advisers covering some 300 areas of platform features and functionality.

While the price point continues to be a key consideration for advisers when it comes to platform due diligence, the study found no evidence to support the view that it is only possible to compete effectively in the platform market on price alone.

The quality of the non-price aspects of their propositions are integral considerations, the report states.

The scope and quality of the core functionality – transaction processing and client reporting – is of paramount concern for most advisers.

The report adds: “Service quality is a notoriously difficult area to measure effectively. Some platforms operate differentiated service propositions where different advisers receive different ‘levels’ of service.

“The application of differentiated service propositions is probably most visible in the level of adviser access to face-to-face support.” 

A total of five platforms have been awarded a platinum rating by AdviserAsset based on their aggregate performance across nine key measures.

Aviva, FundsNetwork, Old Mutual Wealth, Standard Life Wrap and Transact were the recipients of AdviserAsset’s kite mark for excellence.

In all, a barometer of advisers’ confidence in the platform space continues to grow year-on-year. However, some platforms are perceived by advisers to be more at risk of major change than others.

Colin Turton, director of the firm, said: “We saw through our data that Cofunds was in trouble before it came into the public domain. We think that we are ahead of the curb if you accept that advisers decide the future of platforms.”

The report says: “The platforms most viewed by most advisers as being most stable include Aviva, FundsNetwork, James Hay, Standard Life Wrap and Transact. Those platforms where adviser confidence in stability has most improved year-on-year include Aegon, Cofunds, Elevate, Transact and Zurich. Most of these positioning improvements are in part due to the future direction of the platforms becoming clearer to advisers.”

The report is also based on 75,000 reasons why each platform was chosen as the client solution, and 5,300 platform service quality questionnaires completed by advisers covering 28 aspects of service quality.