There are already many analogies used around the broad area of choosing a platform, so I am going to resist the temptation to add another one. Suffice it to say, it is a hugely important decision – whether the ‘winner’ is expected to be used for a handful of clients or several large segments of a big practice.
My sense is that there is a very short and a very long answer to this question.
The very short answer is to choose the platform (or indeed off-platform solution) that is most likely to meet the needs of the client over the timeframe under consideration.
The very long answer starts with the recognition that it depends on a very long list of considerations, probably including (but not restricted to) functionality, service, connectivity, price and culture. The timeframe is also important here, as portability is not yet where is needs to be and therefore the hassle and cost of moving between platforms (or other solutions) cannot be overlooked.
This long list of complex issues makes choosing a platform pretty tough – sure, there will always be a platform that claims it can do it cheaper, but can it really? Does the cheapest on the block score well in the other key categories, or will your clients be left to regret putting price before form? And even where price is one of the primary drivers, what is the likelihood of today’s cheapest platform still being the lowest-cost offering in five years’ time?
Before even getting to price, the primary consideration must always be client requirements, now and (to an appropriate degree) in the future. The collapse in the market share of the fund supermarket platforms has been stark, and demonstrates how easy it is for a platform to take an eye off the ball and start to misjudge the needs of future customers. One thing that seems pretty important is to understand where each platform is heading, how much it is investing in the future and how aligned its future is with the needs of your clients. This is hard (probably very hard) because some platforms change direction with the wind, others do not know where they are heading themselves and some are exposed to intervention outside their control.
This is why we see culture as important. It is the seldom-discussed part of the due diligence process, but it probably reveals more than any PowerPoint presentation or sales pitch that you might be subject to. Are the platforms under consideration really driven to generate better client outcomes, or have they just started to use that language since Martin Wheatley took office as chief executive at the FCA? Do they view their primary relationship as being with the client and their aligned adviser, or with the fund management community? Do they consider themselves to be facilitators of great financial advice, or a distribution channel for funds? There are endless cultural differences in the market, but these questions give a clue to intent, and therefore to purpose.
Platforms aligned to fund managers (including in-house operations) will inevitably seek to influence the choice of funds, despite such activity being outlawed by the FCA. If you do not believe me, simply ask what proportion of overall assets are invested with the in-house or ‘preferred’ funds and then assess how likely (after reflecting for pricing) such an outcome is down to chance.
