Mark Polson's remedies for platform transfer issues

Mark Polson's remedies for platform transfer issues

Something a bit different this month. I know you think the life of a Money Management columnist is all yachts and parties and stuff, but we do other things, too. 

This month I’ve been thinking about what little changes we could make that would make a big difference to the sector. And the one I keep coming back to is process.

Let me explain, if you haven’t already clicked away/turned the page. In the same way as the key to alleviating poverty in remote areas isn’t so much direct aid as creating really good roads and infrastructure, the key to getting our industry working much more smoothly is process. 

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And while financial planners and advisers have admirable traits in many areas, process design isn’t necessarily one of them. That’s fine – clients need you to be great advisers, not business process workhorses. The problem is that the people in the big companies who can afford to hire the Six Sigma process guys also don’t seem to be that good at it. This is both a shame and really silly, because processes are really, really important in our industry. Being better at them would save thousands of firms and millions of clients a lot of hassle and stress.

Transfer trials

Take platform transfer processes, for example. (Don’t worry, this will turn into a technology column shortly.)

We talked to 95 firms for some recent research and asked them to describe the process of transferring between platform providers. Almost one in four said it was either “a huge undertaking” or “absolutely brutal”. More than half the firms said their experience varied significantly, but not one said it was easy. The median time our respondents said it took them was around 20 hours per case, and almost no one suggested it was less than 10 hours.

Easy might be setting the bar high. But I don’t think it should need to take 20 or even 10 hours to transfer a client – in fact, I reckon it can be done in three hours. I’ll come back to that in a minute, and explain why. It has to do with process, and control, and when we get to the tech bit I’ll suggest some things you can use to help with that.

Identifying the problem

First, let’s take a couple of steps back. We know that the idea of recommending transfers between platforms can make advisers as twitchy as a squirrel after downing five cans of Rage Inferno Energy Drink. There’s all sorts of generally valid reasons for this, but they tend to fall into two broad categories.

The first is suitability. In particular, reviewing a recommendation to see if anything more suitable for the client has become available. We reckon the rules are pretty clear on this. 

Take COBS 9A.2.19 EU, for example. I know you can recite this in your sleep, word for word, but here’s what it says anyway: “Investment firms shall have, and be able to demonstrate, adequate policies and procedures in place to ensure they understand the nature, features, including costs and risks of investment services and financial instruments selected for their clients, and that they assess, while taking into account cost and complexity, whether equivalent investment services or financial instruments can meet their client’s profile.”