There is rarely a year when regulation doesn’t loom large for providers and advisers.
But for those plotting their course in 2017, there are more than just a few regulatory icebergs pitting the horizon.
From Mifid to Priips, there is a significant volume of 2018 regulatory reform coming down the track, all of which needs to be planned for in 2017.
As a result, I suspect the delivery maps for platform providers and their technology suppliers are already looking full next year. And herein is a potential trend for advisers to monitor in 2017 – platform overload.
For some platforms, Mifid and Priips – two heavyweight regulatory changes - will fall alongside the already onerous task of upgrading their technology, or indeed moving wholesale to a new supplier.
Advisers should take a hard look at their platform partners to assess (or reassess) the impact of these changing market factors.Will these platforms have the bandwidth to cope with delivering major technological change as well as large-scale regulatory reform?
Re-platforming swallows money and soaks up resources and manpower. We have seen a couple of high-profile platforms encounter major challenges when changing their tech.
Some platforms will have their work cut out juggling with technological change and regulatory reform, alongside all of the other seemingly straight forward adaptations, such as the reduction in the Money Purchase Annual Allowance.
As a result, the re-platformers will be required to peddle ever faster to keep pace with the pack and ensure there is no business disruption.
Advisers shouldn’t underestimate the scale of this task and the potential for it to go wrong. If it does, this could lead to reduced service levels or an inability for advisers to deliver the services they have agreed with their clients.
So what should advisers do? The most obvious conclusion is that the platforms they are using must be able to meet the needs of their clients’ today. And if they’re don’t, some tough decisions need to be taken.
Therefore advisers should take a hard look at their platform partners to assess (or reassess) the impact of these changing market factors and whether their original choices still stack up.
We saw "status quo bias" emerge as the new FCA’s watchword in 2016, emphasising the need for advisers to carry out ongoing research to ensure that the platforms they have selected remain fit for their intended purpose.
We know this isn’t going to be the last words on due diligence and advisers will face even greater scrutiny from the regulator over whether or not their platform choices provide the best possible outcomes for clients.
For advisers, this means dusting off the clipboard for a fresh round of due diligence to see how their platforms shape up. With so much change on the horizon in 2017, advisers may find their existing research is no longer sufficient, so now is the time to check your platform is fit for the journey ahead.
Alistair Wilson is head of retail platform strategy at Zurich UK Life
