Investment platform AJ Bell has launched an online due diligence hub outlining key areas for advisers to focus on when constructing client portfolios.
The hub is free for advisers to use and features independent content and commentary from specialists FinalytiQ, the lang cat, Platforum and Defaqto in addition to a download link to FinalytiQ’s Advised Platform Report that includes data and analysis on the financial performance of 26 advised platforms.
AJ Bell’s own due diligence factsheet will also be available to download from the hub.
Billy Mackay, marketing director at AJ Bell, said: “Platform due diligence has become something of a minefield over the past few years and unfortunately there is no single formula that can be used to navigate the process.
“By sharing all this information on our due diligence hub we aim to make it easy for firms to perform vigorous, smart due diligence and gain greater comfort that they are choosing the most suitable platforms for their clients.”
Based around FCA guidance and the questions AJ Bell is most commonly asked by advisers, the company said it had constructed the hub to include key information on each company’s financial strength, service, functionality, investment choice and pricing.
AJ Bell said that based on “industry estimates” £200bn of customer assets could be migrated to new technology in the near future. The company added that an estimated £19m in combined pre-tax losses made by platforms in 2015 had prompted concerns over due diligence when examining the profitability and financial stability of platforms.
Mr Mackay said: “No fund manager has all the answers. No one company has the best products. Yet we seem to be in a position that this is exactly what we must have achieved should there be a challenge.
“The regulator can gain far greater insight and information than an adviser. All that can be done is to select good financially strong, regulated providers and funds and hope that that company or fund does not fail.
“There is little confidence within the adviser community that we can ever supply sufficient due diligence to satisfy the regulator.”
Peter Chadborn, director at Plan Money, said: “Due diligence is achievable for most advisers, but it's more a case of what the regulator actually wants to see and what the particular fund is, so I don’t see it as a major problem. It is possible if you supply enough information.”
The launch of the service from AJ Bell follows Old Mutual Wealth’s decision to ditch technology provider IFDS after it ran into problems with a platform upgrade. Old Mutual instead signed a deal with FNZ that already serves Standard Life and Elevate.
The upgrade with IFDS was expected to cost Old Mutual about £450m, whereas the move to FNZ reportedly cost between £120m and £160m.
AJ Bell has also integrated a new capital gains tax tool into its online investment platform for financial advisers as part of the expansion in its digital presence. The service lets advisers monitor capital gains and losses for each investment held in General Investment Accounts (GIA) on its Investcentre platform.