Skandia’s Q3 2012 Adviser Confidence Barometer survey, which asked 627 advisers for their views on platforms found 48% of respondents thought they could not be independent if they only used one main platform, with 40% believing the opposite to be true and 12% “not sure”.
Skandia said the results show a high level of uncertainty regarding platform use and its impact on independence.
The FSA’s stance on the issue is: “We expect it to be very rare, if possible at all, that a firm could use a single platform for all of the investment business of its clients and meet the standard for independence advice.”
However, Skandia points out the FSA has also said an independent adviser can use one ‘main platform’ as long as they consider its suitability for each client and offer access to other platforms or off-platform assets where appropriate. The provider said: “Therefore, the 48% of advisers who believe you can use one ‘main platform’ and remain independent are technically correct.”
Platform use patterns
Skandia’s research also revealed that it is extremely common for advisers to use just one main platform, with 40% of advisers interviewed stating this was the case, while 35% said they use two main platforms and only 1% of advisers (7 of those interviewed) said they use a large number of platforms.
Skandia said this supports the findings from financial research company Investment Trends which found advisers use an average of 2.2 platforms for new inflows. Investment Trends also found being an adviser’s primary platform is critical for platform providers as advisers place more than three-quarters of new platform business through their primary one, with 17% going to their secondary platform and just 6% going to all other platforms combined.
Perhaps worryingly for some platform providers, Investment Trends also said the top three platforms hold more than half (51%) of primary adviser relationships, suggesting that for the majority of their customers, financial advisers are looking for a platform that offers a wide range of funds which they then use to build customer portfolios at a competitive cost.
Skandia said its own research revealed it is unlikely the number of platforms an adviser will use will change after the implementation of RDR. A breakdown of its research revealed 72% of advisers stated their model would stay the same post RDR, while only 20% said they would start to use more platforms post RDR. Just 8% claimed they would use fewer platforms, perhaps indicating that these advisers are looking to offer a restricted advice model.
“Hopefully advisers will be reassured that they can use just one main platform without jeopardising their independence status provided they can justify individual suitability for their clients each and every time,” said Skandia’s marketing director Nick Dixon.
“Using one main platform is already common, and over three quarters of advisers are believed to be using one primary platform. For all platforms, winning primary relationships with advisers will be crucial.”
Do you use platforms? Do you think an adviser can remain independent if only using one platform? Let us know using the comment box below…