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11th July 2024

Following on from our last article on investment platforms, we speak with Mark Sleeman, Chartered Financial Planner at Ascot Lloyd, about why it’s important to speak with your financial adviser about whether you are on the right platform to meet your financial goals.
 

mark sleemanMark Sleeman

How do you approach investment platforms as a financial adviser?

It's important for us to understand what the investor needs. The key things we think about for our clients when it comes to investment platforms apart from whether or not they can offer the sort of investments the client is going to need, are ease of access and their consistency in getting things right the first time. You're never going to completely get rid of issues, but one of the most important things is if the platform does get something wrong, they put it right well and quickly. There are some platforms that just prevaricate and don't give the attention and priority they should when dealing with issues. Whereas there are others that absolutely want to get issues solved. They want to make it right. That, for me, is one of the biggest indicators of a great investment platform – how they deal with things in adversity.

What are the common issues you come across on investment platforms?

A common one is payments to clients not being right, or not happening at all. This can happen for all sorts of different reasons. Also transfers can take a long time, which I believe may be because the old scheme is just not wanting to relinquish the assets but equally could be simply that their process just includes too mich negative friction which slow things down. Those are the big things, and how platforms deal with them is a big factor in how they’re viewed by advisers.

What is the typical fee structure for using an investment platform?

It depends on the investment platform. Some will have just a set fee that is determined when you start. So, the more money you have in, the lower the fee percentage you start at. Others have a tiered structure, so the platform charge on the first £100,000 might be, say, 0.5% but as you invest more the platform charge reduces. More platforms seem to be going towards the tiered model now as it's seen as a more transparent structure for everybody. Some platforms also have fixed feed plus transaction charges. The different charging structures can mean that different platforms can be more suitable than others depending upon how much is being invested and how actively trades are being made.

What role does cost play in choosing the right investment platform?

The platform charge is an important consideration, of course, but it's never the absolute consideration for our clients. I think everybody understands that to have the best service and to have a good degree of choice you need to go with the most cost-efficient option rather than the cheapest. It's about finding the right balance between those aspects so you get a value for money solution that meets your client’s specific needs.

How do you decide what's the best platform for your clients?

It will depend on what we're trying to achieve with and for the client. It will depend on the value of what we're putting in, i.e. how much money or money’s worth if it’s a transfer of existing holdings. It will also depend on what type of structures we're putting in, whether that be tax wrapped products like pensions, ISAs or even investment bonds, or simply a general investment account (GIA). Not all platforms can cope with investment bonds so that can be a factor especially if trying to keep things together on a single platform which can be desirable if managing an investment strategy across different products. Then a large part of it comes down to what customer service is like. That is probably my biggest factor. Price is factored in but is not the deciding factor that would trump the others, it all has to hang together to support the client’s financial plan.

What is the process of moving platforms and are there any drawbacks?

It's typically not that difficult in terms of technicality and putting to one side for amoment the time some platforms take to make it happen, but one issue is that you are potentially out of the market for a short period of time. As assets are disinvested, they go into cash, then they get sent across to the new provider, then they get reinvested. So, you're out of the market for, usually, one to two weeks. Now, you can avoid this by what is called an in specie transfer where the same holding are re-registered on the new platform but you have to ensure that the same investments down to the specific share class, can be replicated otherwise some could be left behind and you’re back into the encashment process again. As a result its helpful for clients to take advice and this also takes time to prepare the report and deliver so that clients have an opportunity to ask any questions and we can ensure they understand what will happen, when, how etc. Moving platforms can be beneficial but we've just got to make sure it’s right for the client and that they understand why its in their interest.

It's easier than ever for people to manage their own investments through a self-managing investment platform. What's the value of using a financial adviser?

A lot of it comes down to having the reassurance that you are doing the right thing. Many people are fairly knowledgeable about money and investing now, but they are time poor and may not be able to carry out the research to underpin their decisions. They sort of know the right thing to do but want to have that reassurance from a financial adviser that they are doing the right thing and, crucially, whether those decisions remain suitable as circumstances and goals change in the future.

That's what we do as advisers and, importantly, as independent financial advisers we have the duty to act to bring about good client outcomes including which investment platform, if any, is right for our client. We continually do the due diligence to ensure that investment platforms are still doing what we want them to do and are in the client's best interests, that their investments are suitable for the longer term, and that everything is set up to have a good probability of helping the client’s meet their long-term goals. Remember, investment involves risk, and the outcome is ultimately uncertainHowever, advice gives clients both a return of time and some reassurance that their savings and investmentare where they need to be so they can achieve what they want within the constraints of time and risk.

If you are interested in discussing how you can maximise your investment returns speak to your adviser or our Client Services team by requesting a free callback - get in touch.

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Important Information

Past performance is not a guide to future performance and may not be repeated. Investment involves risk.

The value of investments and the income from them may go down as well as up and investors may not get back any of the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is for information purposes only. Nothing in this communication constitutes financial, professional or investment advice or a personal recommendation. This communication should not be construed as a solicitation or an offer to buy or sell any securities or related financial instruments in any jurisdiction. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the document.

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