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What you didn't ask on platform due diligence

01 July 2016

Eight due diligence questions you probably don’t ask your platform (but should)…

Due diligence is, according to the FCA, “one of the three pillars of getting advice right” (it hasn’t shared the other two, though we can probably guess), but how far should advisers go in their probing of service providers?

Platform research in particular has become a buzz topic among advisers and, perhaps even more so, providers.

Selecting the right platform partner (s) for your clients has unsurprisingly made its way up the regulator’s priority list. A couple of years ago, it suggested nine lines of questioning advisers should adopt when researching platforms. These included questions about the provider, charges, tax wrappers and funds, and support.

Consequently, advisers are tweaking their questionnaires. As well as those ‘core’ questions providers would expect to be asked, more advisers are inquiring about platforms’ demonstrable market commitment and future plans, the possibility of product bias (see question one below), local support, and the rationale behind any risk assessment tools available. Advisers are also asking for platforms’ views of the market, potentially to assess whether their businesses would fit culturally as well as functionally. But there may still be some areas under-examined.

Here are eight questions you (probably) don’t ask of your preferred platforms…

  • Is the process of choosing one particular investment route noticeably easier than others?
  • Where does the platform sit within the strategic direction of the larger organisation (if there is one)?
  • When providing ‘second line of defence’ questions to clients accessing pensions, how do you check if advice has been given?
  • How would you summarise the added value we - and our clients - would gain by selecting your platform?
  • How do you handle re-registration, movement of funds from one platform to another?
  • What happens if there is not going to be enough cash to pay a client’s income?
  • How are you demonstrating commitment to the market with investment into your platform and what are your plans in the coming years?
  • What local support can you offer our firm and what are your plans to continue supporting our firm over the next 12 months?

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