The Financial Services Authority (FSA) says it will be all but impossible to use a single platform for all clients and still meet its independence rules. So, are these three IFAs taking a risk, or are they on safe ground?
It could not have been put much clearer, could it? In a guidance document for advisers, the Financial Services Authority (FSA) said it believed it would be “very rare, if possible at all” for a firm to use a single platform for most of its clients and remain independent.
Advisers have taken notice: research from CoreData, published last week, suggested single platform use is beginning to fall, with a sixth of advisers now using one platform, compared with a fifth a year ago.
According to the report, which polled some 1,250 advisers, a third (32%) are writing business through two platforms, while a further third (31%) are using three.
Three advisers on why, against FSA recommendations, they use a single platform
Spotting this trend, Aviva and Alliance Trust are two platform providers that have positioned themselves as targeting the ‘secondary’ market – advisers’ fringe business at both the low- and high-net-worth ends.
Nevertheless, a significant minority of independent advisers are bullish that a single platform strategy can be beneficial for both adviser and client.
“For IFAs, it’s a business risk issue: am I prepared to take the chance that the FSA will come and beat me up?” asked Alan Dick, principal at FortyTwo Wealth Management.
Dick said he places “99%” of the business his company writes with Transact. “We think we are doing the right thing and we are prepared to have the argument if we need to,” he said.
Advisers should think of platforms as “outsourced admin services”, he said, something the FSA was beginning to recognise.
“On that basis I can’t understand why it wouldn’t be suitable,” he added. “In fact, I would go as far as saying a platform should be suitable for all your clients, and if it isn’t, perhaps because something better comes along, then that is probably suitable for all your clients too, and you would be more likely to move all of them over.”
Regular reviews are key.
“We do an analysis of platforms annually and file that to make sure our platform is still functioning and is priced as it should be,” said Ian Brady, founder of Oak Tree Wealth Management, which uses Raymond James exclusively.
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From June 2019