I think we’re all quite interested in the new platforms that are coming along.

Fundment is among the ones we hear about most often, and we’re including it as part of our due diligence.  

Newer platforms pose some interesting questions for firms. Some people will jump straight in – they’ll look at the proposition, feel that everything stacks up and they’re happy to take that risk and go for it.

Others have concerns around the practical implications for new platforms, such as a lack of an AKG/financial strength rating. There’s also the issue of whether to move to something new now, or make a decision once the platform is a bit more established.

Anything new in this market is generally quite interesting, because the sector is largely made up of lots of older platforms. Some of those platforms are good, and some face an uncertain future as a result of mergers and takeovers. So when something comes along that is brand new, it’s exciting.

There may well be risks with trying something new – the risks of new technology for example, or the money that’s needed to invest in the business. For many firms, difficulties can crop up when you want to do anything slightly more complicated, like in-specie transfers, tiered pricing, capped ongoing adviser charging or phased drawdown.

Has the platform been fully tested against those kinds of scenarios? Do the staff know what to do, and do they have experience in working in the way you want to? Of course, you only really find out the answers when you test the platform out and start placing new business.

Noise issues

When we see headlines about things like changes of ownership and tech changes, we’ll engage with the platforms and have a conversation with them.

Clearly, platforms want to retain the business, and they’ll always have a good explanation and narrative as to what’s going on. While sometimes that isn’t enough, sometimes you can be persuaded to stay the course.

If we take Nucleus/James Hay as an example, there have been some concerns about what’s to come, but listening to the company’s plans, it sounds quite positive. More broadly, whether advisers and planners should listen to the M&A noise or not comes down to doing your due diligence on the acquiring company.

"A rule change from the FCA can change a platform’s profitability in one announcement."

Replatforming is where the worries creep in because we’ve seen so many failures.

The difficulty from a firm point of view is tech changes take time to get going. So if you’re looking at moving clients, should you do that now? Or when things start going wrong?

If a replatforming doesn’t work, it’s going to be a lot more hassle than transferring people from one platform to another ahead of time. Both replatforming and bulk transfers are a pain, but you may be able to control the hassle a bit more if you’re the one deciding to move to a different platform.

The problem advisers have is the uncertainty – if you’re concerned about what the future holds, you may choose a different platform just to have a bit more control over the whole process.

When a platform you work with gets a new owner, if you don’t know anything about that new owner, that’s a concern. Equally, if you know too much, and what you know you don’t like, then that’s a concern too.

Then again, there are deals that intuitively make sense – Transact’s acquisition of Time4Advice springs to mind, as does FE Fundinfo’s deal to buy CashCalc. If you know the parties involved and a deal makes sense, even if it might mean change there is much less reason to be concerned.

Getting to grips with private equity

Obviously we’ve seen the rise of private equity involvement in platforms over recent years.

At the end of the day a platform has to be owned by someone, whether that’s shareholders, a life company or private equity.

For due diligence, it’s about looking at the history of that private equity firm and seeing what it has done with previous businesses. If it has just gone in, stripped out assets, made it more profitable and then sold it, then that might not be a company you want to be involved with.

You want to know that backer is going to be there for a while, and that they’re going to invest.

Any private equity group or company that has a stake in a platform business shouldn’t think they can just turn a platform around and make a quick buck – if they do think that way, they’re probably deluded.

There are so many danger points in running a platform. The FCA or government could turn around and make a decision that impacts the business in a massive way.

For instance, if the government decided to scrap tax-free cash on pensions, all of a sudden platforms are faced with a big system change that needs to be implemented. Legislation or a rule change from the FCA can change a platform’s profitability in one announcement.

Price, service and decision-making

Cheapest isn’t necessarily best on platform pricing. That said, advisers and planners are rightly concerned about bringing costs down where they can. After all, it’s their duty to make sure they are doing the best for their client, and big fees are not that.

In terms of what might trigger a change to the platforms you use, service rather than price is probably the key thing. We hear from advisers who have stopped using particular platforms based on recent problems they’ve had.

"Platforms are beginning to realise that pricing isn’t everything, and that really service is everything."

Business development managers may sweet talk you into trying their platforms, but issues can become apparent once you start using them, or when something doesn’t go according to plan.

If you’re used to getting great service, there’s a blip and the platform apologises and gets the issue sorted, you can get over it very quickly. But when service drops, something goes wrong, there’s a massive error or a case that seems to drag on and on, that’s probably a flag to think about moving. When bad service is not simply a one-off, but it’s one thing after another.

We all make mistakes, us as paraplanners included. It’s about how a platform or provider deals with it that counts.

Engagement is crucial – no excuses, just sorting the problem and getting on with it. It’s worth reflecting on how the company has dealt with the issue(s). If it’s enough to give you pause, is there a viable alternative?

While we are seeing prices come down, platform charges on their own don’t tend to drive decisions, unless there’s an outlier that’s really expensive. Most advisers and planners tend to take the view they can justify their platform choices, as long as the service and the offering as a whole is up to scratch.

Platform market progress

There is starting to be an understanding now about financial planning rather than more transactional advice. We met with an investment firm recently who said: “It’s all about performance.” As soon as they said that, we knew they weren’t making our shortlists.

Technical resources are also a good way for platforms to set themselves apart. Abrdn (formerly Standard Life)’s Techzone and Royal London are providers that have got this right, and good technical resources give platforms and providers a lot of clout in the market.

Watch our recent HomeGames on Platforms featuring Nathan Fryer, Verona Kenny, Andy Bell and Mark Polson

The platform market has come a long way in the past five to 10 years.

Platforms are beginning to realise that pricing isn’t everything, and that really service is everything. Service doesn’t just mean telephone or face-to-face support, but the actual online service and how the platform operates.

We quite like Darren Cooke of Red Circle Financial Planning’s take on all this: “If I need to phone you, your platform doesn’t work.”

We’ve come so far from rebates between fund managers and platforms, and platforms offering advisers fluff round the edges like transfer value analysis reports to get firms to use them.

Generally, platforms are now acting as custodians for clients’ assets.  Overall, we want the whole platform market and all the platforms within it to do really well – that makes things easy for all of us.