Ever since the Financial Conduct Authority (FCA) published its thematic review on assessing suitability back in 2016, platform due diligence has been firmly on the adviser radar.
The review's objective was to highlight the need for the industry to deliver good client outcomes. The regulator was concerned that without proper product and platform due diligence, adviser firms 'would find it difficult to judge whether solutions are suitable for their clients'.
Over the past five years, providers and industry commentators have shared a number of ways advisers can approach platform due diligence. The most critical part of the process is ensuring that the platform can meet the suitability requirements for each client segment. But however advisers choose to carry the assessment out, and whether it's annually or on-going, it should be comprehensive enough not only to ensure good client outcomes but to future-proof the success of their firms too.
The ease and simplicity of doing business
As a guide and starting point, the FCA asks adviser firms to document the rationale behind their platform selection, taking into account:
- the provider
- range of funds and tax wrappers
- asset classes
- support services; and
- terms and conditions.
As a firm's platform is core to how efficient the business is, it's important advisers take the time to assess how relevant each of these areas are for their firm.
Platform charges are of course a key consideration for all firms but so too is the ease and simplicity of doing business. And our platforms offer clear pricing models. For example, Standard Life Wrap offers a tiered fee structure which takes a long-term view to sustainable pricing and our innovative Drawdown Price Lock means advisers can 'lock' the lowest fee, at the rate applicable, when the client's pot is most large, ensuring no price rises as income is taken.
Our AKG A rating is evidence of our on-going commitment
In our view, when it comes to due diligence and comparing platforms, there are three core areas to focus on:
- financial strength and scale – can the platform continually re-invest and develop as well as support scale, growth and sustainability?
- functionality - does the platform have the core tools and features to support the adviser firm's service proposition?
- operational capability - can the platform demonstrate a track record of managing significant volumes and sustained performance?
Taking the first point, we operate a programme of continuous improvement for our platforms and invest a significant amount in them. This ability to continue to re-invest is recognised by our AKG A rating for financial strength. We were the first platform provider to receive this rating and, to date, the only one. AKG ratings are a very good indicator of a provider's financial strength and go beyond a platform's solvency. The ratings also take into account operational abilities, performance and how the provider can continue to meet the fair expectations of clients.
Our AKG A rating underlines how we can help meet adviser and client needs and is evidence not only of our profitability but our on-going commitment to our platforms. Ultimately, our strong financial position and continued re-investment in our technology mean more efficiencies for adviser businesses over the longer-term to help them build scale.
Functionality and continuing to support good client outcomes
When it comes to functionality, a platform should be able to support the adviser firm's service proposition, meeting the needs of its client segments and enhancing business processes.
For our part, our platforms offer a number of invaluable features and tools such as our automatic rebalancing tool, bulk trading tool and Capital Gains Tax tool which allow advisers to work more efficiently so less time spent on administration.
We also recently launched a suite of enhanced client reporting tools on Standard Life Wrap including a new online, and mobile-enabled, client portal, client snapshot reports and an Income and Withdrawal report to help advisers enhance oversight and governance within their firms.
The client portal offers transparency and clarity while the client snapshot reports offer key client data consolidated onto a single page. Advisers can choose how this data is presented to clients, with striking, easy-to-understand visuals.
And with the evolution of centralised investment propositions (CIPs), our platforms have one of the most comprehensive investment solutions on the market with access to a full range of sustainable funds and ESG-related models to meet clients' preferences.
Standard Life Wrap also offers Individually Managed Accounts (IMA) technology where, thanks to automation, advisers can offer a model portfolio to clients and work alongside a DFM to take individual investment needs into account . And we're continuing to invest in our Separately Managed Account (SMA) technology on Elevate. The technology makes it much easier for DFMs to manage their portfolios on the platform and helps advisers access outsourced managed portfolio solutions for their clients efficiently, while benefitting from simplified processes for buying, selling and switching of SMAs.
Our platforms recently retained platinum ratings by AdviserAsset tools, awards which assess a number of indicators including user experience and service quality. These accolades were the first UK platform ratings to be awarded in 2021 and are further evidence of our consistent offering to advisers to support good client outcomes.
Operational capability and a safe home for your clients' assets
As part of the due diligence process, it's good practice to assess how the platform can not only maintain but invest in service delivery as it grows to continue to meet adviser and client needs. So operational capability and the safe protection of clients' assets is a pre-requisite for a well-run and sustainable platform. On a day-to-day basis, our platforms successfully handle a significant volume of phone calls and trades.
Our platforms have also, once again, been recognised in this year's Defaqto Ratings retaining Gold Ratings for service. It's the highest accolade awarded and a direct reflection of advisers' satisfaction of the service they receive. Our platforms have also retained 5 Star Ratings which take into account functionality, business administration, and online servicing.
Platform awards are a good indication of sustained performance and the service and support a platform offers, especially if the awards are voted for by advisers who are at the heart of the platform experience. We recently achieved four awards at the latest Schroders UK Platform Awards, as voted for by advisers, including Best Platform Provider under £25bn for Elevate and Best Platform Provider over £25bn for Standard Life Wrap.
The platforms that will come out on top
Platform due diligence can be time-consuming. However establishing a watertight, strategic process can give advisers the peace of mind that thorough research has been carried out, with enough evidence gathered to support the final selection.
A thorough approach to platform due diligence is also the best way for advisers to future-proof their final decision for the growth and success of their firms.
We believe it's the platforms that can support the adviser proposition for good client outcomes, while providing excellent levels of service, are the platforms that will come out on top of an adviser's due diligence research.
The value of investments can go down as well as up, and could be worth less than originally invested.
The views expressed in this blog should not be regarded as financial advice.