One leading IFA firm in Scotland explains how going on platform is transforming their pension offering
Johnston Carmichael Financial Services Ltd, one of Scotland's leading IFA companies, has used platform technology for clients using collectives for more than 10 years now. In early 2008, the company decided it wanted to explore how it could use the same functionality for its pension business.
"We've been on the Cofunds platform pretty much since it started" explains director Craig Hendry. "Over that time, we've really benefited from features such as online valuations, online switching and the range of fund choice you get. In addition the management information that is available has been useful in helping shape future business models. So it seemed the logical step is to see if we could extend those benefits to pensions too."
Since mid-2008, a high proportion of new pension business and transfer business has been arranged via Cofunds, primarily using the SIPPcentre SIPP.
Investment choice has been a key factor in the move. "The fact that you have a full fund universe is a strong selling point, particularly for SIPP clients," Hendry adds. "We have also been able to accommodate SIPP investors who wish to purchase commercial property and direct securities off platform but who can then choose from a full universe of collective funds on platform - and they can move easily between the two. Many clients do focus on mainstream funds but it's good to know you can offer them more specialist choices too."
Hendry particularly likes the range of specialist cash funds on offer on Cofunds. "In this market, you do need that cash haven but some money market funds have run into difficulties so having competitive cash funds on platform is very valuable."
Likewise, current market conditions have reinforced the value of online fund switching. "In the past, if a client had a personal pension with a life company, it could take days if not weeks to carry out a fund switch. On a platform we can move a client almost instantly if we want to take them out of a particular fund or change their asset allocation. Plus we can place those assets in cash on platform, which gives us and the client time to decide what to do next."
Hendry says the early feedback from pension clients has been very positive. "Having a website where a client can get instant valuations has been very well-received. For many clients, the ability to see 'where they are' at any time is very reassuring. They feel informed and in control."
The administration benefits for the firm have also been clear. "Valuations are easier, reporting becomes simpler. We have a price feed direct from Cofunds to our back office, which gives us an instant snapshot of how funds are performing. The time-savings for our back office are very evident."
That efficiency extends to remuneration. Johnston Carmichael Financial Services operates primarily on a fee income basis - which can be managed on platform. "For example, fees can be taken either as a percentage of assets or as a fixed amount and they can be taken direct from the product. For pension investors, especially higher-rate taxpayers, this is particularly beneficial as they can obtain tax relief on the fee."
With strong growth in pension business over the last 12 months, the company believes momentum can continue, with new clients attracted by the firm's proposition of strong investment expertise and choice, fee-based advice and a long-term investment in the client relationship.
Key to this, the firm will look to continue to move more of their clients' pension assets on platform."
"Having both collectives and pensions on platform really does enable you to take a holistic approach to a client's portfolio," says Hendry. "It avoids replicating what they already have - you can look past the individual tax wrappers and start treating everything as part of the same strategy. That's got to be the way forward."
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