GlobalData Plc

Platform selection should be more client-centric

Advisors should pay close attention to due diligence when selecting the platforms they recommend to their clients, according to a new review by the Financial Conduct Authority (FCA).

The FCA has published the findings of its thematic review, “Assessing suitability: Research and due diligence of products and services,” covering the research and due diligence that wealth managers carry out on the products and services they recommend to retail clients. While the FCA found that on a broad level firms demonstrate good practice in due diligence, research, and achieving good outcomes for their clients, there were many firms that did not show consistently good practice across all products and services.

As our “UK IFAs, Investment Managers, & Platforms” report shows, the vast majority of advisors review their investment product providers regularly. However, according to the FCA, the level of research that goes into selecting platforms is not always sufficient. Platform research and due diligence were found to be particular areas of concern for the FCA, as many firms observed in the review showed insufficient research and due diligence when selecting platforms.

Our research shows that for IFAs the top three support features of a platform that make it attractive as a partner were low cost, online access for advisors, and administration and reporting functions. These features are all about the relationship between advisors and platforms. Online access for clients was ranked fourth, while client reports and statements were among the least important considerations.

In light of the FCA’s review, more needs to be done to make platform selection priorities more client-centric, in order to match client needs and improve the platform suitability for each client.

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