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The suitability of platforms in financial advice - four factors to consider

By Ben Wright | 05 December 2017

SUMMARY: Tenet's Business Development Director, Ben Wright, suggests four key factors that advisers should consider when assessing if a platform is the most suitable solution for a client.

It's evident that the number of people using investment platforms is increasing year on year. According to the FCA, £108bn was managed on UK investment platforms in 2008. By 2016 this figure rose to £592bn.

The increasing number of advisers using investment platforms however has unsurprisingly resulted in the FCA tightening its focus on this area of financial advice. It has launched a study into the UK platform market, to ascertain who really receives value from using investment platforms - the adviser or the client, and will publish its findings by summer 2018.

There are a number of different factors that are vital when it comes to deciding if a platform will be the most suitable solution for a client, but let's have a quick run through our top four.

  1. Does your client need a platform? Although it may sound obvious, the first thing to do is ascertain whether a client actually needs a platform or not by looking at what type of investment or product solution they will need and where exactly this is available. For example, the client may require a fund which is widely available, but a product which is not, such an offshore bond. They may well be 'digitally engaged' and require frequent updates with regard to the value of their investment and in a situation such as this, a platform could be required to undertake the investment for the client. 
  2. What level of interaction will the client need? Do they want to have instant access, in an easy-to-use, client friendly portal? If yes, then a platform would probably be a suitable recommendation. In this growing age of technology, many platforms now host the ability to enable your clients to log on to view their investment using a wide range of devices, 24/7.
  3. Identify specific tools/functions that the client requires Another factor to consider is the importance of identifying which elements of a platform the client will need, or even use. A number of platforms come with all the bells and whistles attached, but as you will imagine this comes at a cost. If your client really needs a specific feature, then the platform you select should include it. If, however, your client isn't going to use many of the available features on a platform, then why would they pay for the privilege of having them?
  4. If client doesn't use it, then lose it! Many platforms offer different benefits and drawbacks for a wide range of different products and services, so it's understandable that selecting the correct platform can be difficult. To summarise however, this simple mantra is worth remembering, especially with the regulator's focus on who really receives value from using investment platforms.

As you may be aware, Tenet has recently entered the platform market space launching our own investment platform which is one of the most competitively-priced solutions on the market.

As we covered earlier, with growing pressure from the FCA, 'value for money' is becoming a big consideration when it comes to platforms and client recommendations and if the needs of your client can be met by multiple platforms equally, then logic would suggest that the cheapest platform would offer the most value for money. For more information, please speak to our Tenet Platform team.

By Ben Wright, Business Development Director