The majority of advisers do not know how to undertake due diligence on their prospective platform providers, a new study has found.
Although the FSA’s platform discussion paper calls for IFAs to thoroughly screen the different platforms, a CWC Research survey has found many advisers are unsure where to start.
CWC senior partner Clive Waller says it is ultimately the responsibility of the FSA to ensure advisers know how to examine the advantages and drawbacks of different providers.
“IFAs are expected to carry out platform due diligence but most, quite reasonably, no not know how,” he says.
The survey of 100 advisers from 76 firms found 80% see platforms as core to their business strategy in the future.
Almost half of the advisers surveyed follow a one-platform model, again embracing the change of sentiment in the FSA paper, but Waller describes this as "a huge opportunity but also a threat".
He predicts a massive rise in platform business, but he says there will be big losers amongst platform providers, asset managers and, in particular, life companies.
He highlights Cofunds, Standard Life, Transact, 7IM and Nucleus as the firms currently enjoying success in the market.
“Few within the industry understand quite how much the RDR will change the advisory landscape unless it is greatly diluted,” Waller says.
“These changes are driving the migration to a platform-based model even faster, as this is the easiest way to improve the overall client proposition whilst reducing administration costs and introducing appropriate compliance checks and audits.”
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