April 2013

Hi all. So what’s been going on since we last spoke? Hope the transition to RDR went smoothly for all (she says with a wink). I am going to be sharing some of the more interesting conversations I have had over the last month or two, insights from the goings on at Platforum HQ and some snippets from the Financial Conduct Authority about platform due diligence.

Well, I have to say that the first three months of this year have been manic – I have been all over the place talking to advisers eager to now press on with those final few niggling bits and pieces for life in the post-RDR world. The documentation of platform selection is one of those loose ends advisers have been putting off – everyone knows they need to do it and the regulator has been clear in its communications long before the RDR, but no-one really seems to be sure exactly what is required, how often and what it should look like. Please DON’T sigh and turn the page... Hear me out!

How many times do I walk into a firm and the principal says “just tell me what I need to do to continue using platform X” – sound familiar? I will continue. Most firms we speak to nowadays are using platforms in their business as formality, it’s nothing new anymore it just makes sense – platforms provide a pretty good way of processing business in a systematic way, FACT. BUT there are, at the last count, I think 30+ providers in the adviser space – so is it ok to just assume that the platform(s) you have been using for the past two years is still right for your firm? The answer is no, it’s not ok.

I think my first question to most firms is which platform do you use, and what do you think of it? At The Platforum we like to share all the adviser feedback on platform experiences via our User Leaderboard – it’s free of charge so do take a look and please do us leave your own reviews. It’s worth spending 5 minutes reviewing your peers’ experiences for you to make a call as what’s important and what’s not – to you.

You would be surprised how many times adviser firms tell me:

“Yeah, they are alright”
“Bit slow in responding when there’s a problem which drives me mad”
“They don’t have ETF’s – very frustrating”
“Lots of whizzy gadgets which I just don’t use but they seem to be ok and I like the BDM”

The point I want to make to you all here is that maybe the platform(s) you are using are absolutely right for your business and your clients, but you need to test that theory and there are certain things that make the testing easier to measure.

As I am writing this blog I have spent the day with the lovely and very astute Rory Percival, Technical Specialist at the FCA. Rory has been speaking at our annual spate of adviser roadshows up and down the country. This year the theme is “Best Practice”. Rory has been very public in expressing just how different the new FCA are to the old FSA. I quote “the FCA are absolutely not the FSA rebranded – the whole structure, culture, supervisory is all very different.” Rory, we hear you loud and clear, yet advisers are still nervous, confused and wanting that checklist for satisfaction.

I am sure the FCA have learnt a thing or two from their predecessors; however, advisers, listen up – supervision of platform use will be on the hit list of thematic reviews later this year. There are no checklists and there are no formal guidelines FACT – but there is guidance and there are tips.

PATs 5 tips on platform due diligence which makes the FCA happy

• Platforms: using wraps and supermarkets
  This factsheet is referred to time and time again – have a read of the 9 areas considered important with respect to platform use BUT do not just use this as a template, more to formulate your thinking.
• Ask your clients
  I’ve heard Holly Mackay tell advisers it’s not Treating Customers Fairly (TCF) it’s actually “Treat your granny fairly.” The FCA told me recently that they had not yet met one firm who, when they asked their clients about their service, didn’t learn something (and subsequently change or review their service as a result).
• Think about it
  Be really really honest with yourselves about exactly what it is you want the platform to do – is it simple trading or execution or do you want that integrated cash-flow modelling tool? How well has your chosen platform done – have they overpromised and under-delivered? How important is having access to ETFs?
• Sense-check
  Reviewing the market, eliminating those obvious no no’s but revisiting any providers discounted in the past who might now look good (or your peers recommend a second look). What does the pricing look like? How good is the service? What do others think? Will this provider aid delivery of my client service proposition (and for all clients)? Should I have a different provider for some of my clients? What does this service look like?
• Document it
  A good due diligence document is one where the firm has documented their thought process and highlighted their key criteria and justified their selection which matches their own objectives in achieving good customer outcomes.

March 2013

With the weeks racing past us it’s time to reflect: two months in, how is everyone feeling about the new world post-RDR? I personally have been busier than ever chatting to advisers about platforms – most people nowadays are using platforms on a daily basis, and for most clients, but more and more of you tell me “it’s time to consolidate and refine existing platform choices.” This is possibly music to some FSA ears.

I have always declared that platform due diligence is merely common sense, and although the FSA have laid some guidelines, they are realistic and sensible. Below are the nine points they FSA suggest advisers should be considering when using platforms and a link to the FSA factsheet:

PROVIDER – Who is the provider, are they financial sound/profitable?
TERMS – Any minimum investment? Security of assets.
CHARGES – Is there a bps charge/flat fee/family discounts? Any transaction fees?
ASSETS – Can I trade ETFs/Structured products?
PRODUCTS – Which products are available – onshore/offshore bond, SIPP, cash ISA?
FUNCTIONALITY – What functionality does the platform have – bulk switching/rebalancing?
TOOLS – Any on platform modelling tools – cashflow/portfolio planning tools?
ACCESSIBILITY – Can clients access their own accounts?
SERVICE – What’s the BDM and customer support like?

February 2013

Happy New Year tout le monde – I'm not quite sure where January has actually gone! December was a blur for a number of reasons and not all of them social ones – those advisers that I have spent time with in January seem to be all chomping at the bit eager to implement the plans and processes they have spent months agonising over.

January has also been exciting for me with AXA Elevate generously purchasing a number of licenses to my PAT due diligence tool and handing out to some lucky firms who get to receive my independent guidance and assistance in completing their platform due diligence.

Having spent a great deal of time chatting to Elevate-introduced advisers on a 1:1 basis this month, the majority tell me Elevate is a pretty good all round solution for a good number of their clients. Advisers consistently tell us Elevate are really good at providing the touchy feely stuff but what they can’t do is provide an impartial opinion – I on the other hand... So I sincerely hope those jammy advisers have really valued my data analysis, scoring, opinion and guidance and saved themselves heaps of time in the process. Hats off to Elevate for leading the way as a provider and helping advisers with the arduous task of platform due diligence.

The FSA declares that it is imperative that all adviser firms, whether they are happy or not with their current platform provider, keep up to do with who the current players are, the price differentials, functionality needs and align with their own service delivery necessities to clients.

So who’s read our latest free-of-charge publication – An IFAs Guide to The Platform Pricing Galaxy – click here to download it if you haven’t already. I have walked into many IFA offices this month and the guide has been proudly printed, bound and sits in pride of place in the centre of many desks. Has it been useful – I would be really grateful for your feedback – we are always looking for ways to improve our IFA publications making sure they are a useful and worthwhile read.

Ok, we’re are setting off again on the road with The Platforum Dream Team – 2013’s theme is "Best Practice" and we have some great speakers with some interesting messages to share in the form of case studies. Click here for the agenda. We will be popping up in Bristol, Southampton, Birmingham and London in March and April and venturing "up north" to Edinburgh and Manchester in November. The event is free for IFAs so do email emma@theplatforum.com if you would like to reserve a place – numbers are limited so book now to avoid disappointment.

I have received a large surge in IFA user reviews this month which form our User Leaderboard which you will all know as our version of trip advisor. Wealthtime, True Potential, Nucleus, Parmenion and Transact all receiving some great feedback from adviser users. If you are an adviser please do leave your ratings and reviews – you’ll be surprised just how many IFAs value a candid viewpoint. (The providers all tell you they are the best right?) Click here to leave your reviews and take a look at who the winners and losers are.

I sign off this month by highlighting the latest Money Marketing wrap and platform report supplement – its got some really good insights into whats going on and of course yours truly makes an appearance!

Until next time
PAT

December 2012

With Christmas just around the corner and the New Year fast approaching I think now is a good time for reflection on what’s happened in 2012.

To recap some of the more interesting platform related stories for the first part of the year can be found here and if you are wondering yes – the second half of the year will be available to review in January.

I am going to be a year old at the end of February having been surgically enhanced from my former self and I will be celebrating this feeling really positive about the journey I have been in the last 12 months. Just by offering a bit of care a sympathetic ear has made all the difference in my pursuit of helping adviser firms through what they thought would be an arduous task of conducting their firms platform due diligence. It really doesn’t have to take weeks and weeks and the answers are usually staring you in the face it’s just a case of documenting them... correctly.

I have received some great feedback from you guys about the free of charge User Leaderboard – reading reviews from likeminded advisers about their use and experience of the platform players is really helpful. The platforms are not all good at everything – there have been some casualties so it is worth spending a couple of minutes whilst you dive into the office quality street to have a look and please do leave us your reviews it really does help others.

We have seen a some interesting changes to The Platforum Leaderboard over the course of the year – for those who didn’t know, The Platforum conduct detailed analysis of the platform market each quarter and report this in our publication The Adviser Platform Guide.

Now we don’t pretend that our Leaderboard is a "who’s the best" we think that decision only each adviser firm can make and everyone has their own needs and must-have’s of a platform provider but it’s a very broad line-in-the- sand based on both qualitative and quantitative data. Advisers who subscribe to my PAT tool have full access to the full data, the analysis, the scoring and of course ME!

I thought I would share how the Leaderboard looked at the end of each quarter of 2012.

• Q1 – Skandia followed by Nucleus, Cofunds and Standard Life
• Q2 – Transact followed by Skandia, Standard Life and Nucleus
• Q3 – Elevate followed by Nucleus, Transact and Skandia
• Q4 – Transact followed by SIPPCentre, Elevate and Nucleus

It really goes to show that things certainly don’t stand still, there are constant changes in the market – the amount assets being administered on platforms, how quickly platforms are growing (or not), their functionality abilities (and limitations), the service they provide and of course price generally - bundled arrangements becoming unbundled, cross subsidy deals and platforms positioning themselves for their target portfolio size.

I expect most of you by now are starting to wind down for the festive period so I would like to say to all advisers both those I’ve helped this year and those I will be helping next year – have a wonderful Christmas and New Year and see you in the afterlife (of RDR that is...)

See you in 2013!
PAT

October 2012

I’m not really sure how we have got to October – September was such a blur (and no, not because I’ve been letting my hair down). It just goes to show that time is moving a pace and the end of 2012 will be upon us in no time at all.

One of the reasons is that I’ve spent a lot of time recently speaking at various industry events – it is conference season after all – emphasising to all and sundry the importance of thorough platform due diligence. I am still amazed at the confusion in the market with some three months to go until RDR-Day, about what is actually required, when by and how comprehensive it needs to be. As an industry we are quite good at causing mayhem, tying ourselves up in knots and getting nowhere.

Although advisers nowadays probably know who they want to work with and which platforms tick their boxes, our regulator is going to get tough next year and there are certain expectations to be met. It is simply not good enough to print off a few articles here and there and ask your preferred platform provider to send you through some due diligence – in fact it’s dangerous.

We have seen the platform pricing war start to heat up this month with the likes of Cofunds declaring how they will operate post-RDR with 1700 funds with clean share classes. From what I hear from the adviser community, simple is better – the easier to explain to clients the better; but they are worried about the unknown. “What if, after I have completed my annual platform due diligence, I should be using a different platform, one which is more in tune with my business and service? How do I deal with this, in bulk/at review stage and how do I explain this to clients – surely it’s my problem not theirs?” Advisers are concerned about something which actually isn’t a problem yet!

Another story this month is that the FSA (or newly-formed FCA) has started to talk about what regulation might look like next year, and they are warning that it’s gonna be tough, with the main focus on achieving good customer outcomes in a clear and honest way – I’m not reading from the rulebook I assure you.

Here are a few headline topics about adviser supervision to have a think about. Let me know if these concern you – I have a meeting with the regulator to talk through platform supervision next month.

• 'light touch' approach to supervision, having contact with most firms once every four years
• developing a risk-profiling tool to assess the risk to consumers that each firm posed, using scores from Gabriel submissions
• 'proactively contacting newly-authorised firms' to explain their regulatory obligations and reporting requirements under the new supervisory structure for small firms
• the FCA's contact centre would be the first point of contact for many firms who will no longer have a nominated supervisor as under the FSA

Finally, I am pleased to announce that The Platforum has teamed up with Panacea to bring you a dedicated Wraps and Platforms forum.

The forum has been designed by Financial Advisers and offers advisers throughout the country the chance to share ideas, discuss industry issues and increase knowledge as part of a unique online community.

Visit the Wraps & Platforms forum for adviser support – get involved today.

Until next time,
PAT

September 2012

Although a good number of adviser firms took a well-earned breather throughout August I have been busy with those seizing the opportunity to do a bit of housekeeping – compliance housekeeping that is, and platform-related at that (in case you were wondering...)!

I have spent quite a lot of time chatting to firms, in some detail, about what they like and don’t like about the platforms they either use now, or are considering using in the future – it’s fair to comment that, on the whole, platform business remains "sticky". The platform operator has to be doing something pretty diabolical to warrant the upheaval (and cost) of IFAs moving clients’ assets to a different platform. Having said that though, I am seeing a number of adviser firms re-evaluating to offer clients a wider choice advice services – resulting in their previous "platform of choice" not being suitable for all clients. Read on...

As you may have already seen on our site, I went to see an IFA firm in Chelmsford, Essex last month who, as members of The Platforum website, gather quite a lot of their platform knowledge and news from us as a means of keeping up-to-date. This inspired us to feature an "IFA of the month" which shares feedback from some of our advisers as well as providing a "word from the street" overview of what’s going on out there. In this first edition we explain how this IFA firm is using a platform and a DFM – have been for some time and all works well – but going forward are starting to think about their corporate clients as well as their advised clients. The challenge for them is making sure that they engage with the right providers to support each service. Hence my point above: adviser firms are changing, they are building on their successes "what they do well" and planning small steps into newer horizons.

One IFA told me last week, "I’ve built a D2C platform proposition which is a totally separate FSA regulated company whereby the client can donate all or part of any commission entitlement to charity." He also told me that the objective was to open this opportunity up to similar like-minded small IFAs. He told me "I simply can’t service all my clients profitably, we all know that – but I don’t want to leave them in the lurch and am not ready to sell them on. This is a really nice way of offering smaller clients the opportunity to save money by dealing direct and contribute to charity."

Some other important news this month (albeit a bit late) is that (drum roll please...) AXA Elevate is top of The Platforum Leaderboard this quarter. If you are a PAT subscriber you will of course have access to the updated Leaderboard and results. I talk to a lot of Elevate users on my travels and one of the most commented aspects of their proposition I am told is "they are very hands-on, their platform consultants know what they are talking about and they have genuinely helped us." The happy Elevate users also make the point that "AXA Wealth do not feel like a life company like some of the others. They have successfully reinvested themselves." I think that this is quite an achievement and very important to those IFAs who cite "trust and confidence" in their top five "must have" platform selection criteria.

August 2012

As London basks in Olympic glory, lots of my IFA friends are winding down and heading off for some R&R in the sun in the knowledge that September is going to be full steam ahead. Despite putting the RDR on the back-burner for a few more weeks many IFAs are telling me they are concerned and still confused. Most IFAs tell us they are using two or more providers – some tell us they have a primary platform but have an alternative because “the FSA say they should” and some have a diverse client service proposition which warrants different platform solutions. Everyone has their own platform needs and there is no standard answer – for some, one platform is ok... she says nervously!

There is a piece on our website which talks about why we think it is important for IFAs to document a process. The FSA have released a factsheet where they state that “using one platform for all clients... is likely to be rare, if possible at all...” and that “using one platform for the majority of clients... is a much more likely scenario because the independent adviser firm is considering off-platform solutions where this is suitable for all or part of a client’s portfolio”. I would urge you all to read this factsheet and consider whether your business needs to evidence independence or not.

The FSA have been recently quoted asking advisers to “stress-test” post-RDR propositions. This, as you would expect, caused some lively reaction, but I think it’s important to think about. I don’t believe in complicated questionnaires or spending weeks doing some sort of ‘gap analysis’, but where there has been a considerable change to your proposition, at some time in the future take a look back: how is the transition to adviser charging, is your platform delivering what it said it would and, most importantly, ask clients what they think.

I have spoken before about how to conduct a good due diligence review but I have listed below some of the key things to think about again:

• Platform Market – who are the players?
• Any major changes – anyone exited the market?
• Price hikes/drops – bundled to unbundled?
• Experience – has the platform(s) delivered? What doesn’t it do?
• Clients – what do your clients think?

July 2012

After a really hectic June, July for me is a month for reflecting on the past 6 months – the FSA have been busy making decisions on platform rebates and centralised investment propositions/replacement business, the platforms have been busy unbundling and disclosing their charges and IFAs have been busy thinking about the future being independent or restricted, taking those final few exams and setting out their client service propositions ready for the new year.

For the last couple of months I have been tearing around the country in one way or another, either hosting half day roadshows or smaller roundtable events over lunch and the message is pretty consistent. IFAs have a lot on their plates in general – where platforms are concerned, most have either made their decisions (and just need to conduct on-going due diligence) or are going to “wait and see”.

If I reflect on the roundtable events held during May/June with 26 IFAs – 27% use one platform predominantly in their businesses at the moment and only half of these advisers will be considering a secondary or alternative platform solution when it comes to doing the due diligence next time around. I think this is testament the FSA is getting their message across to IFAs and it’s being understood – one platform is unlikely to suit all clients. It is still evident however the majority of adviser firms are using 3 platforms or more – talking to over 20 firms last month 58% confirmed they use a range of different platform providers and 80% of these firms do so as a result of legacy business.

June 2012

Welcome to summer – what a joke, I can’t remember a start to June so dreadful – but us Brits are good at providing a stiff upper lip and carrying on regardless!

I’ve been busy throughout May and now into June helping numerous advisers with their platform due diligence and having some really interesting conversations with many of you. Platform due diligence, as we know, is one of those necessities that actually does make sense – lots of IFAs tell me they are happy with the platforms they are using but an equal number tell me that by doing a “proper” due diligence exercise it has brought into question how some platforms have not delivered on promises. One IFA told me “I’ve been using platform X for some time now and they have been consistently slipping on service – we are now looking at a number of alternatives who meet our needs better”. In my view this is exactly why the FSA emphasise regular review of platforms an absolute must for IFA firms and will be monitoring how this is handled beyond the RDR.

It’s just not good enough to ask a platform provider to produce a due diligence document so that you can tailor it; and if platform providers offer such you should proceed with caution – the FSA ain’t silly and they know. It is the IFA firms’ sole responsibility to demonstrate they have conducted due diligence on the platform market and to validate how and why their platform choice(s) are justified. It seems like common-sense to you and I but you would be surprised if I told you just how many firms cite “they have no spare time to speak to all 28 platforms”,” not knowing where to start” and “lack of market knowledge” as reasons for staying put with their current platform.

May 2012

Well I told you all last time we spoke that I have been travelling up and down the UK talking to lots of IFAs and hearing about their worries and concerns. As we move closer and closer towards the RDR D-Day, murmurs of “what does it mean, what is there still left to do and have I done everything I need to” are an all too familiar sound. Some very diverse messages have been shared, ranging from those who feel really confident that should the FSA knock on their door on 1st January 2013 they would smile and say “come in” to those who would hide under the desk in hope that they turn around and go away.

When I started out on the Dream Team Tour of the UK it was not only about meeting as many IFAs as possible but also educating and reassuring nervous IFAs, along with those who simply don’t have time to sift through mountains of platform provider paperwork wondering what to do with it. I’ve found that I have been able to offer some helpful guidance, hints and tips both to those who were already using platforms in their businesses and to those who were thinking about use of platforms for the first time. It’s a pretty daunting task when you are unsure exactly what the FSA requires you to write down. There are no standard templates. It’s trial and error all the way.