The Fuss About Platforms

Head Over Heels [81] – the fuss about platforms

You may have come across news in various papers (The Telegraph for example) about some investment platforms being costly and offering inducements to advisers to use them. I couldn’t miss the opportunity of commenting about this.

A platform is basically an online administration service. This enables your investments to be traded, bought, sold and rebalanced. Some enable you to hold all sorts of investments, others are more restricted to mainstream funds. The platform has legal responsibilities in delivering its service and providing statements, contract notes and so on. Every financial adviser that decides to use a platform on which to hold your investments, must justify why it is selected.

Money, Money, Money [76]

Some people will always see price as the first hurdle, if one platform is much like any other. Some charge a fixed fee, most charge a percentage. Most have a sliding scale, so that the more you have “on the platform” you begin to have charges reduced through a tiered charging system. However, this is your money, not a takeout meal. Reliability is crucial.

Ring, Ring..[73]

You can have a platform with rather more “bells and whistles” but invariably, this comes with additional costs. The ability to hold investment property within a pension, shares and so on, all have various additional costs. Some also charge for each type of “wrapper” which is really a charge for a product – a SIPP, Flexible Drawdown Pension, ISA etc.

Naturally these costs all begin to add up and a valid question is really whether you would make use of all the “bells and whistles”. Many will not, but some certainly will. So, selection of a platform ought to suit you more than your adviser. One of the main advantages of any platform is the saved aggravation in attempting to deal with different companies or constructing a portfolio of funds from very different investment groups. I cannot repeat what I think of some providers but let’s just say that they give the impression that they have only just come across a fax machine.

Move On [77]

One of the age-old problems of financial services is inertia. Many will stick with what they know, despite the reality that there are better alternatives. The hassle with all those forms can seem overwhelming. In addition, any adviser that guarantees that moving from A to B will be better, is delusional, the new arrangement may be considerably, better, cheaper, faster etc, but it is not possible to guarantee a better outcome. In the same way that I cannot guarantee that I will rise from my bed tomorrow, I should, but I may not.

The temptation for clients and advisers is to believe the marketing. In addition, advisers may receive helpful bits of kit to enable them to do a better job. This then begins to blindside and erode impartiality.

Knowing Me, Knowing You..[76]

So, what do we do at Solomons? Well we pay for all the tools we use so that we can deliver the service we want. These evolve. This year I have started to use at least 3 new different tools. I’m aware of bias and so we get an independent company to research and assess platforms for us. We do not influence the research or results. We provide details about who we currently use and an overview of the sort of clients and their holdings that we have. We do this once a year.

Most of our clients do not need all the bells and whistles, so we use platforms that suit their requirements. There are lots of unused funds, but that’s not the same thing.  If I want to buy a suit I go to a shop that sells suits, I don’t by them all, some would be too small (most) and some too large, wrong style, colour and so on. That does not mean I am paying for the other suits, merely going to somewhere to obtain what I want.

Another Town, Another Train [73]

If there are good reasons to change your platform, we will advise you to do so. There will not be any new costs because we treat this as a part of the annual fees that we charge for your investments on a platform. All the platforms we have selected to date do not apply exit charges, unlike Waterloo [74]. This was done deliberately.

Cheapest is not best. Back to the suit buying… (surely you bright folk get it) price is one element of the purchase. Does it do the job? Well, when it comes to technology, sadly, all too often platforms break, which is more than a minor irritant when attempting to comply with regulations, designed to protect investors, albeit often with utterly daft realities.

The Winner Takes It All [80]

Good platforms are about two things – sustainability and innovation. The price differential between good platforms is nothing like as significant as these two. Is their business model sustainable? Most platforms do not make a profit, which to put it bluntly means that something must change. That’s just The Name of The Game [77]. Those that do not innovate will eventually be left behind, and when your business is essentially a technology solution, that is a bad business plan.

In summary, we do not use platforms because of the tools they provide, or any other incentives. We will move you from one platform to another if there is good reason to do so. All platforms that we have advised, do not apply exit charges. We tend to only use platforms where the bells and whistles come at no extra cost or are not charged if not used. We like innovation but above all, the business model of the platform needs to be robust.

When All is Said and Done [79], we look after our clients for decades, not months or a couple of years, but On and On and On [80]. Decades. So there seems to me to be no point in ripping anyone off. What goes around comes around and all that…. and with the idea of A to B, platforms and things coming around again, its all about money, money, money… so here’s the trailer for Mamma Mia 2.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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The Fuss About Platforms2018-07-23T15:56:33+01:00

Today I found myself in a hard hat and reflective jacket

I was reminded this morning about something that is often pretty obvious to most people but seems to pass me by on occasion. The outcome you seek is not about the process, it is not about the tools, its about the result. Don’t misunderstand me, I’m a process believer and of course having the right tools for the job is vital. However I am prone (as many of my peers also seem to be) of wishing that there was “one bit of kit” that enabled me to do my job fully. The reality of being a good financial planner (let alone a great one) is that this is still a pipe dream.

I have a lot of “kit” yes it doesn’t look terribly big or significant, because it resides mainly in cyberspace and on my computer. It would be nice to have a single application for client work, in theory this is achievable, but only in theory and assuming everyone (or enough people) want the same thing and work the same way – which of course is at best a temporary condition. I have a plethora of software and a fair amount of hardware – enough to make the moon landing look like a walk in the park. I need to accept that my various tools (which are invariably fairly expensive given the industry I operate in) are suitable at different times for different jobs and different aspects of the same piece of work.

So what happened this morning to remind me of this? well the local council has finally decided that our road is worthy of proper repair (delight to the local residents). We were only given at best 24 hours notice that the road would be closed and cars needed moving – not ideal for those working abroad or on holiday. Rather like a small boy I gaped at the various trucks, diggers, scrapers… all German of course! that came together as a team to each perform their task like a… well good orchestra may be stretching it, but it was pretty impressive. “So what will you do about the cars in your way?” I asked. “We’ll lift ’em out, photograph them and put them in another road… that skip too”… if only I could do that with some of the pension companies that I have to deal with. In essence, we have a tool for the job and will get things out of the way so that we can get it done. There were, as you might imagine a lot of blokes in fluorescent jackets each operating machinery and playing a part. No it hadn’t really occurred to me to properly observe this along the motorway in the days before Sat Nav and I set staring at lines of cones. It was a helpful reminder that the single tool to dig up and relay the road properly, does not currently exist… similarly, whilst I may have to combine software applications, reports, websites and so on, the job is the outcome and having the right tools is important, but knowing which one to use, when and how to orchestrate a team is where the effectiveness really shines.

If you are a client (or thinking of becoming one) you have to put up with a lot “bits” of information, requests for it and so on, I know this can feel a little frustrating… isn’t there just an easy way to create a financial plan? I can assure you that  what we ask for is necessary to get the job done to the best of our abilities. I can assure you that the end result is worth the effort, once it is neatly packaged and put into clear terms that make sense and above all, provides information to inform your decisions…we are, after all, laying a new road to your future.

Dominic Thomas – Solomons IFA

 

Today I found myself in a hard hat and reflective jacket2017-01-06T14:39:48+00:00
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