Advisers avoid switching clients to a different platform because of the cost and complexity involved, despite the fact they could save thousands of pounds in fees, research from the Lang Cat has found.
The research found over the long-term, the differential in charges between different platforms was enough to justify transferring, but the cost and complexity of undertaking such an action meant 56 per cent of the advisers contacted by the Lang Cat were unwilling to recommend a transfer due to complexity, cost and suitability concerns.
Last year the Financial Conduct Authority acknowledged that switching platforms could be "burdensome" and it found the majority of advisers - more than nine in 10 - said they moved a client’s investment from one platform to another less than every five years.
The Lang Cat's research, which involved 95 advice companies, found it would cost £1,155 to transfer its clients to a new platform and take 20 hours.
Mark Polson, principal of the Lang Cat, said: "I think many advisers come to the conclusion that platforms are much of a muchness, because superficially it can look that way, but under the bonnet they are quite different.
"Many advisers told us that they will move new clients to different platforms, but keep the existing book of clients on the old platform due to the complexity, but we think that if the advice firms processes are good enough, and the platforms are on their game, then it could get down to three hours to do a transfer.
"None of this is simple, but advisers don’t have to go back to first principles either."
The Lang Cat's research showed there was a 0.16 per cent differential across Isas, self-invested personal pensions and general investment accounts from the lowest cost to the most expensive across the platform market for a client with £500,000.
The report said that over 30 years, this differential could add up to a client paying £91,434 more for a platform than they might have done had their adviser switched.
The Conduct of Business Rules and other regulations require companies to put the interests of the client ahead of the interests of the adviser.
Mr Polson said many advisers believed they had to start at the very beginning in terms of assessing the suitability of a client and while this was not the case, this view means many advisers regard switching platforms as too complex.
He added that the regulators must provide greater clarity on this point to facilitate greater levels of platform transfers.
Andy Bell, chief executive of platform business AJ Bell, which commissioned the Lang Cat’s work said: "I have a lot of sympathy with advisers when it comes to platform transfers but unfortunately it is not an area where they can stick their head in the sand.
"The Lang Cat report is essential reading for any adviser grappling with their obligations around platform transfers under the Prod and Cobs rules. It signposts the relevant sections of both sourcebooks and provides practical suggestions on how advisers could use a streamlined suitability process to facilitate bulk platform transfers."