Advisers don’t move clients off platforms without really good reasons – it generally takes significant failings on the part of platforms to prompt these shifts.
Advisers have been concentrating their new clients onto a smaller list of platforms that are well suited to their investment propositions and client segments.
As part of our latest adviser platform research, we surveyed advisers about the factors that would lead them to consider transferring a client away from a particular platform.
Cost is the top reason, although few advisers are concerned with shaving one or two basis points off a platform’s charge. When we looked at this three years ago, service came top of the list. Since then, most platforms have completed their replatforming projects and service levels have dramatically improved.
Factors such as tax wrappers, client access or quality of reporting tend not to be so prominent in decisions to switch. These become more of an issue as advisers’ investment propositions or clients’ needs evolve, requiring something the current platform does not offer.
Off the back of the Financial Conduct Authority‘s (FCA’s) Investment Platforms Market Study, new rules around unit class conversions and improving in-specie transfers will be implemented at the end of February 2021 and should reduce some of the perceived barriers to transfer. The STAR initiative is also picking up momentum with platforms joining its ranks and committing to making transfers easier for the end client.
These moves will no doubt oil the wheels of platform transfers. But for advisers, the decision to switch platforms will continue to largely rely on client suitability and outcomes, as well as how firms run client segmentation and evolve their investment propositions.