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The right number of platforms to use

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So this is something that came up in the sessions I did last week at the PFS conference (and a very good conference it was). How many platforms should an IFA practice use?

My glib answer on the day was 2.8. The real answer though is only a little less glib. You should use the best solution for each client, putting their needs above your own practice management efficiencies. I’m pretty sure most IFAs do that anyway, but there are some funny habits out there, born of inertia in the main.

Incidentally, if you go to the FSA website, search for PS11/9 and look at Annex C you’ll find some helpful examples of good and poor practice in platform usage.

I see a lot of IFAs who say proudly that they have a multi-platform strategy and so are regulator-proof. But when you delve a bit deeper, it turns out that there are perhaps 3 advisers in the practice, each of whom uses one platform across their client bank. “Dave’s a big Skandia user, Mike has been with Transact for years and Sam joined us last year from a firm where he used Elevate and has carried on. We’re, like, totally all about the multi-platform thing.”

Hmm. Advisers value control and independence, even sometimes from the firm they work in. But this approach – and I even had a couple of guys even at the conference tell me this is how their business was structured – isn’t on the money.

In the example above, the business doesn’t have three platforms. It’s three businesses, each using one platform. The fact they sit near each other is kind of irrelevant.

In segmentation terms, this vertical approach doesn’t work. It blows any client segmentation out the water. It is possible to find commonalities in client groups and map a platform strategy onto that. But for a firm to do this successfully, all RIs have to sign up and leave their allegiances behind.

A forthcoming report will say that 25% of advisers plan to review platform supplier relationships before RDR. A good place to start would be to make sure that the whole practice is on board and ready to stick by the decisions made in that selection exercise. Now is the time to cut loose the habits of the past and make active, conscious decisions going forward.

And the effect on practice management? Well, that’s a subject for another blog…

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About Mark Polson

lang cat founder and boss. Expert on all things platforms, pensions and investments. Prolific writer and public speaker, even when people ask him not to be. Knows more about Scandinavian black metal than you, and isn't afraid to prove it.