The chosen charging structure of a platform can tell you a lot about its future strategy - and its current priorities.
Any adviser could be forgiven for feeling their head is spinning, faced with the diverse range of charging structures that the 30-odd platforms operating in the UK have unveiled over the past two years.
Now the burden is on each firm to determine which of these propositions is likely to be most appropriate (and most acceptable) to their various client segments.
Due diligence is important and not just because it is a regulatory requirement – it is also important as it is the client who now directly shoulders the cost of platform administration.
In addition, every advisory firm needs to be vigilant that their business does not pay for a platform's charging decisions in other ways.
The charging structure that a platform chooses can be extremely revealing about its future strategy. For example:
• Are charges at a level that will allow the platform to continue to invest, develop and respond to new market opportunities? Are they sustainable or just an offer to lock business in?
• Does the platform have a channel conflict - that is, it supports advisers while competing against them with a cheap as chips direct proposition? We know ‘direct' and ‘advised' are different things but it can feel uncomfortable when your partner is also your competitor.
• Is the charging structure truly focused on helping you to grow your business as well as its own? Are your priorities aligned? Can you trust them?
We are committed to the intermediated sector and have no plans to go direct. Indeed, we feel a direct proposition would create tension in our relationships with our advisory clients.
It is true that our technology is routinely chosen by D2C players to power their proposition but we are clear that we will not compete with any of our clients.
Andy Coleman is director of distribution at Cofunds
Two global vehicles
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