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How we chose the best platforms for our business

Advisers reveal their due diligence process for selecting the right platforms for their business and their client base. With some 25 platforms vying for market share, what makes one platform stand out from the next and what does the future hold for the market?

Choosing an investment platform can be a time-consuming process for advisers and with an abundance of choice available, knowing where to start is often the first hurdle.

The FCA has made clear what it expects of advisers. In its report on platforms it stipulates that the suitability of any platform “will depend upon the client’s particular circumstances and requirements” and “irrespective of your firm’s strategic decisions to use a platform, you must still consider whether a platform is suitable and meets each client’s needs before recommending it.”

So how do advisers go about whittling down their options?

Selecting a shortlist

The first step is to eliminate platforms that do not meet the firm’s fundamental client proposition.

Paul Lindfield, director of Sedulo Wealth Management, says: “First we focus on our core proposition – what it is that we as a firm are aiming to achieve? From that we are able to decipher what criteria we need in a platform and rank each individual feature as critical, important or useful.”

Sedulo Wealth Management uses the third party services of compliance support provider ThreeSixty to carry out a review of the market and compile a shortlist.

It is an approach shared by other advisers. Ben Sear, partner at Martin Redman Partners, says the firm uses Defaqto to narrow down a list.

“Essentially, we look at the entire market and go through the various filters, considering what is important to us and what is important to our clients. This creates a rather focused list – in fact I was surprised at how focused it became – and from that we will write to those on the list and work from there,” he says.

Leicester-based Furnley House Wealth Management, treats the shortlist process similar to that of choosing an investment.

Director Stefan Fura says: “We start with a quantitative process, whereby we compile a list of must-haves and then go through each platform to see if their technology can deliver that service to our clients. Once we’ve completed that part of the process, we move on to qualitative assessment.”

Going into detail

Once a shortlist has been selected, advisers are in a position to focus more closely on the platform’s service, tools, financial strength and commitment to the market.

Fura says: “Undoubtedly, cost is an important factor when looking at platforms, but you really need to look beneath that and make sure the platform is financially robust and can deliver on the services they promise.”

For some advisers, sending out a detailed questionnaire is the first port of call.

Norwich-based Almary Green uses a questionnaire as the initial step in the due diligence process, providing it with a firmer idea of the platform’s proposition and financial stability. Questions include ‘How is your platform financed? Do you have a Moody’s or Fitch credit rating? Have you been audited by a regulatory agency during the last year?’

Martin Redman Partners also sends out a comprehensive questionnaire, divided into several sections; management and business experience, business strategy and financials, personnel, tax wrappers/ products offered, toolsets, investments available, administration processes, risk management, communications, compliance and fees.

Sear says the firm’s chosen platforms must satisfy four criteria:

• Service: both to the client and the firm;

• Ethos: why they are in the market and do their views align with the firm’s;

• Ethics: are there any deals behind the scene;

• Sustainability: are they likely to be put up for sale?

He adds: “If you look at AXA Elevate, as an example, they have really improved in terms of service and tool sets this year but will they stay or will they go and how will it happen? Most importantly, what will the impact be on my clients?”

In an ever-changing landscape, it is becoming increasingly difficult for advisers to predict how the market will evolve over the next few years.

Sedulo Wealth Management uses two main platforms, Standard Life and Zurich, as well as a third, FundsNetwork, which hosts most of its legacy clients, and says its decision to opt for the first two was partly down to their financial strength.

Lindfield says: “We have peace of mind that we know their track record and they have strong, financially robust parents. We avoid the smaller, esoteric platforms as we like to know that the platform is profitable and will still exist in a few years’ time.”

In addition to financial strength, Lindfield says the firm’s decision is also driven by the range of tools offered.

“We don’t use platforms for platform’s sake. We found Zurich was great for personal portfolios, such as ISAs, and has a very handy ‘no loss on death’ clause which was great for some of our clients. Standard Life, although more expensive, offers wrappers such as SIPPs, which are suitable for a lot of our business-owner clients, as well as onshore and offshore bonds.

“We really feel the platforms complement each other and together, we can be certain that we’ve got all bases covered for all of our clients.”

Andrew Hursthouse, director of the Pension Planner, agrees that while cost plays a role, the final decision is primarily driven by whether the client would use the facilities.

“We use three platforms, one of which is True Potential, which we chose because its facilities are unique. While it was marginally more expensive than some of the others, it allowed certain tools, like pension top-ups, which we knew our clients would really appreciate and use.

“When we review our platforms, we always ask whether they would really use or want certain functions,” he says.

Online research tools can also provide advisers with helpful comparisons. Surrey-based Chapters Financial uses Adviser Asset, which managing director Keith Churchouse says does not form the basis of the firm’s decision, but is very useful in reaffirming the house view.

When it comes to making a final decision, a face-to-face meeting is often the last step in the due diligence process, giving advisers the opportunity to ask the platform detailed questions around their clients’ needs.

Fura says: “We pride ourselves on carrying out thorough due diligence and the interview stage allows us to ask questions around the support, software and profitability before we make our final decision.”

What next for the platform market

To ensure their platforms continue to meet their needs, advisers tend to carry out an annual or bi-annual reviews. Churchouse says his firm conducts “ss a minimum, six-monthly check on the platforms we use and we also look at what others are doing in the market, to see if they can compete with our existing platforms.”

Churchouse believes the platform market is entering a new phase with the coming years marking an interesting period of development.

“The platform market has remained fairly simple for the past 5-10 years, but I think it is about to be rocked as large fund houses start to grapple for market share and more importantly, profitability.”

Churchouse predicts the market will expand into a direct to consumer offering and large providers will acquire smaller players in a bid to grow volume quickly.

Lindfield echoes the sentiment: “As technology advances, the smaller platforms simply won’t be able to compete and grow their business, so I believe we will see further consolidation in the market.

“We’re already starting to see direct to client propositions and I think we will see more of them enter the market. It is going to be an interesting time for platforms and for the adviser firms using them.”


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