Platform reviews and the dangers of doing nothing

When was the last time you reviewed your platform choices? The recent market insights report, from the Lang Cat, ‘Let the Suitable One(s) In, delves into the subject of platforms and raises some interesting challenges.

One of these suggests that advisers should re-run the process they use to select a platform every two years. Is this something that really happens? I would argue that, after spending a significant amount of time going through the selection process before signing up a platform, advisers feel they have done enough and many rarely, if ever, revisit the process they used to select them in the first place.

Another challenge in the report is that, when advisers expand the list of platforms they work with, they often leave assets on existing platforms and only focus on assigning new assets to the newly signed platforms. Is this because they believe the existing platform offers everything their existing clients need, or is there a barrier to switching because of the perceived difficulties in transitioning assets from one platform to another?

If the latter, the Lang Cat report highlights that work they have carried out previously has shown that platform transitions are rarely as difficult as many advisers fear.

Sticking with the same platforms can create risk for advisers. With PROD rules demanding advisers segment their clients to meet individual needs, leaving clients in investment portfolios on platforms without reviewing both the platform and the client requirements could lead to issues with the regulator.

You also have to ask if clients are best served by their assets being left on the same platform that was selected when their portfolios were established. How do you explain why a new platform is good enough for new clients but not existing ones?

The report concedes that most clients don’t care about the platform they are on, “as long as it works and is safe”. If this is the case, switching them from one to another should not be a major issue. Indeed, it could highlight to clients just how proactive the adviser is being to ensure their client is always getting the right result.

The report also highlights that it’s not the best policy to look just at the cheapest: price is only one selection factor – it shouldn’t be the main one.

Overall, the message of the report is that advisers should use the platforms that meet the needs of their clients. This is a message that is very close to the hearts of the team at PortfolioMetrix.

Currently, the technology used by some platforms is a barrier to advisers who wish to access the mass customisation benefits offered by our portfolios. This isn’t an issue for advisers who are open to expanding the list of platforms they will work with as there are plenty of options available for them to select.

Once the hurdle of appropriate platform selection has been crossed, the door is wide open for advisers to use PortfolioMetrix to meet the PROD rules and segment their clients in a way that reflects their individual needs, rather than shoe-horning them into an off-the-shelf model portfolio.

For more information about PROD, check out our white paper or to find out more about the PortfolioMetrix mass customisation proposition, please get in touch: