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ADVISER KNOWHOW EPISODE 27 14 MAY 2013
HOW TO MEET THE FCA’S DEMANDS ON PLATFORMS
ADVISER KNOWHOW THE WEEKLY TV
PROGRAMME FOR ADVISERS BY ADVISERS
HOW TO MEET THE
FCA’S DEMANDS ON
PLATFORMS
Last year the FSA caused debate in the IFA community when it warned against shoehorning all clients onto one platform and issues were raised about whether firms could
remain independent if they just used one platform. But some argue that a platform is an
administration tool and not a product itself.
With the new FCA’s focus of suitability at the heart of its regulation how do advisers
ensure they’re using the best platform for their clients’ needs?
KEY POINTS
1 Make an individual decision for which platform is the most appropriate for each client
2 Make cost an important focus but don’t make it the deciding factor
ADVISER KNOWHOW EPISODE 27 14 MAY 2013
HOW TO MEET THE FCA’S DEMANDS ON PLATFORMS
KEY POINTS
KEY POINTS FROM THIS WEEK’S
PROGRAMME, FEATURING AN INTERVIEW
WITH LESTER KILLIP, CHARTERED
FINANCIAL PLANNER AT ANTRAMS
FINANCIAL SERVICES
1
MAKE AN INDIVIDUAL DECISION FOR WHICH
PLATFORM IS THE MOST APPROPRIATE FOR EACH
CLIENT
¬¬ Do not ‘shoe-horn’ all your clients onto a particular
platform without consideration for each and every
client’s specific needs and quirks.
¬¬ If your clients are all very similar and best suited
on a particular platform, you can use just the one
platform - but be prepared to justify why it is the
right choice for each client
¬¬ If you have a varied client bank you will
realistically be using more than one platform,
especially if you have acquired clients who have
already been using a certain platform as it is not
always appropriate to move them off and then
onto the company choice platform.
¬¬ Client suitability has to be at the heart of every
platform choice.
2
MAKE COST AN IMPORTANT FOCUS BUT DON’T MAKE
IT THE DECIDING FACTOR
¬¬ The FCA does not want clients to pay a penny
more than necessary so make sure that you are up
to date with all the charging structures and prices
of the different platforms.
¬¬ Make sure your clients aren’t paying more than
they could be paying on a different platform.
¬¬ However, understand that cheap is not always
better; certain platforms’ expensive costs reflect
their breadth of offering and often provide more
services so if your client has specific needs that
a cheaper platform cannot accommodate, don’t
move them for the sake of cost.
ADVISER KNOWHOW EPISODE 27 14 MAY 2013
HOW TO MEET THE FCA’S DEMANDS ON PLATFORMS
PROGRAMME TRANSCRIPT
“The requirement to have them
all on one platform is really just
a case of saying that it’s unlikely
that all of your clients look the
same and act the same”
Alan Mellor, Philip Bates
Welcome to Adviser KnowHow. This
week we’ll be discussing how to meet
the regulator’s demands on platforms.
Last year the FSA caused debate in
the IFA community when it warned
against shoehorning all clients on to
one platform. And issues were raised
about whether firms could remain
independent if they just used the one
platform. But some advisers argue that
a platform is just an administration tool
and not a product itself. Here with me
now is Lester Killip, chartered financial
planner, Antrams Financial Services.
Before we speak to Lester, let’s have a
look at what other advisers have to say
about how to keep the regulator happy
with platforms.
VOX POPS
What do you understand the FSA’s
requirements for platform use to be?
Can you use just one platform?
because on all cases, you’ve got to take
it right back to client level and suitability
for a client.
Likewise, Aviva has access to everything
and is probably the lowest cost of those
three.
How many platform providers do you
use?
END OF VOX POPS
ALAN MELLOR
We use three or four platforms, part
of which is a bit historical. We’ve use
platforms in the past and we haven’t
necessarily switched people around
because the one we use now is not the
one we used a couple of years ago. We
choose it really on the amount of activity
expected. A big slice of it is the cost of
the platform.
MARK HUGHES
We use Aviva, Standard Life, Skandia,
Transact and Nucleus and Fidelity,
which is not the full platform service,
but was our original platform. So that’s
six providers.
ALAN MELLOR, Philip Bates
The requirement to have them all on one
platform is really just a case of saying
that it’s unlikely that all of your clients
look the same and act the same, and
therefore would all fall into the same
sort of group that would be suitable for
one platform.
How important is the cost of the
platform?
MARK HUGHES, Mark Hughes
I think, for us, that’s not really an issue
because we use several platform
providers. I believe that you could use
one platform, although it would mean
that your clients are really very similar,
MARK HUGHES
Cost isn’t everything, and I emphasise
that because, for example, Skandia don’t
allow access to shares or investment
trusts; Standard Life does, but there’s an
additional charge on the platform cost.
ALAN MELLOR
The price is fundamental. If it can’t be
done better, to justify an extra cost, then
I think you’ve got to go with something
that is cost-effective.
JUN MERRETT, New Model Adviser
So, Lester, what do you understand
the FSA’s requirements for platform
use to be? Do you think that advisers
can just use the one platform and be
independent or do they need to use
more than one?
Lester Killip, chartered financial
planner, Antrams Financial Services
I think, as in the clips that we’ve just
seen, it’s very much our opinion that
it’s client related, but also firm related
to some extent, in that the firm must
choose a platform that offers services
that match what that firm wants to offer.
JUN MERRETT
So how many platforms do you use?
Which ones do you use?
LESTER KILLIP
Well, it’s an evolving pace; the platform
market has been evolving for quite
some time. We’ve used Ascentric a fair
bit; we had a fairly large trust case that
they were able to facilitate for us. Their
reporting has helped the trustees who
are private banks; there is a fair amount
of detail that they require each quarter,
which Ascentric are able to provide, so
that works quite well. On a day-to-day
basis, we have used Skandia in the past.
Once they withdrew the [6850] they
ADVISER KNOWHOW EPISODE 27 14 MAY 2013
HOW TO MEET THE FCA’S DEMANDS ON PLATFORMS
“It’s an evolving pace; the
platform market has been
evolving for quite some time”
Lester Killip, chartered financial
planner, Antrams Financial Services
became expensive at a certain level,
so unfortunately we’re not looking at
them. Fidelity are fairly strong now for
an average IFA client, I think, with their
charging structure at the moment; it’s
very low. In addition, I think you opened,
Jun, with that some advisers think it’s
just an administrative system, and
we’re a little bit towards that. We’ve
been working hard just to come to
fruition with our own back office system,
based on Microsoft Dynamics, and we
believe that if you get the right feeds,
in essence you could use a stockbroker
to buy and sell and be your nominee to
purchase the trackers and ETFs. We’re
very passive orientated, and we feel
that that’s really the future for the firm.
We’d like to think that that would be
attractive to other IFA businesses as
well.
JUN MERRETT
Would you be doing that, instead of
using platforms?
Lester Killip
Potentially, absolutely.
JUN MERRETT
OK, that’s interesting. So, how do you
make sure that you actually comply with
the FSA’s rules around platforms. What’s
your due diligence like?
LESTER KILLIP
For due diligence, there’s about five key
things that we look at. Obviously longterm sustainability for the ones that
we use, so we’ve always tended to use
the major players. The major things are
the cost and transparency. Antrams are
very driven by cost to the client; half a
percent saving in a cost for a client over
twenty years could be fifty-thousand
pounds at different growth rates.
JUN MERRETT
We did see advisers a little bit divided
around cost and how important cost
was. Obviously cost is very important,
the regulator homes in on cost, and they
don’t want clients to pay even one penny
more than they should have to. Yet, as
advisers previously said in the vox pops,
at the same time, you have to pay to get
better services; certain platforms are
more expensive because they provide
more. What do you think to that?
LESTER KILLIP
I don’t agree with that. I think there’s a
little misconception of, ‘if you pay more,
your platform has got lots of bells and
whistles’, but I’m not so sure that every
IFA and every client wants those bells
and whistles, so you’re paying for things
that you don’t actually need or want.
JUN MERRETT
Thank you so much for your time, Lester,
it’s been brilliant speaking to you. Thank
you very much.
You can download the cribsheet for this
week’s edition with further information
on how to meet the regulator’s demands
on platforms at citywire.co.uk/
adviserknowhow or bnymellonam.
co.uk/adviserknowhow.
Or you can find the link and add your
views at @AdviserKnowHow on Twitter.
ADVISER KNOWHOW EPISODE 27 14 MAY 2013
HOW TO MEET THE FCA’S DEMANDS ON PLATFORMS
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ADVISER KNOWHOW EPISODE 27 14 MAY 2013
HOW TO MEET THE FCA’S DEMANDS ON PLATFORMS
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