There are also several software packages – such as Defaqto Matrix, Adviser Asset, Selectapension and O&M – that enable active searches for each client and scenario. These often involve setting up a basic search template and then inputting variables for client-specific research.
There is a time investment involved in setting up the templates, but they can be fairly straightforward when the adviser or administrator is familiar with the system.
Many platforms and investment providers produce their own due diligence documents, although they have an unerring tendency to recommend their own offerings. They claim to have researched the market to produce the documents – but they cannot all be the best.
In conclusion, the FCA wants advisers to undertake due diligence to identify platforms that provide good investment outcomes for each client. This will probably mean using platforms in line with the client segmentation that independent financial adviser firms have undertaken.
Tony Catt is an independent compliance consultant
INSURANCE PLATFORMS
Expert View
Tony Catt, independent compliance consultant, looks at the new entrants to the platform market:
“The most recent entrants into the platform market are insurance companies. This is [an attempt] to keep all the legacy business that has built up over the years. They are able to offer a better charging structure on the platform than has been offered in [clients’] traditional contracts.
“Thus [the insurance platforms] are taking a bit of a knock by keeping the business at reduced rates, but at least they are keeping the funds under management. They also make the point that because they are more recent to the market, their technology is more advanced, although this has yet to be proved.”
PLATFORM DUE DILIGENCE: KEY POINTS
Some of the issues advisers need to be aware of when undertaking due diligence on platforms:
• FCA guidance is that advisers will need more than one platform to suit all their clients
• Advisers generally tend to use platforms for ease of administration
• Choice of platform is likely to be in line with client segmentation
• Choice of platform must be based on client needs
Platforms: The FCA’s view
In its Factsheet 011: Using platform based investments and the independence rule, published in September 2014, the FCA states:
“We think that it is likely to be very rare, if possible at all, that a firm could use one platform for all clients and meet the independence rule. A firm would have to find a platform offering a range of products covering the whole of the packaged product market (or the whole of a sector of that market). And it would need to keep this range under continual review to ensure that it remained whole-of-market.
