The main reasons for turning down platform transfers are cost and procedural problems, advisers said.
However, there are ways that advisers can overcome these issues, the two firms argue.
Not just an ‘absolute no’
According to AJ Bell and The Lang Cat, there are instances when platforms transfers are feasible and, in some cases, cannot be avoided.
- The relative price points of advised platforms are significant enough to warrant a transfer – over £90,000 ($117,251; €104,507) for a 30-year investment;
- Advisers can’t avoid platform transfers because it is administratively difficult;
- Regulations such as Cobs (Conduct of Business Sourcebook) and Prod (product intervention and product governance) are both clear that advisers have to keep the relative suitability of their platform recommendations under review and transfer clients if there is a more suitable platform for their needs; and,
- If there are few propositional differences then price, financial strength and service should be considered.
“It’s clear there are cost and process issues that are preventing transfers from working properly,” said Mark Polson, founder of The Lang Cat.
“However, the regs state that advisers should recommend transfers where they are in a client’s best interest. The fact the initial advice recommendation may be their primary platform that they prefer to use is neither here nor there.”
More guidance needed
Polson added: “None of this is easy, and real life is rarely reflected in the pages of a market study. But we think it is possible to create a much slicker transfer process that works for everyone involved, including the regulator.
“The truth is every participant in transfers needs to work on process. It probably doesn’t take 15 or 20 hours to get one done if everyone involved plays fair and is on their game. Three to four hours might be more like it.”
Andy Bell, chief executive of AJ Bell, added: “I have a lot of sympathy with advisers when it comes to platform transfers but unfortunately it is not an area where they can stick their head in the sand.
“I agree with the conclusion that this is an area where the regulator needs to provide more guidance for advisers but until then we are happy to sponsor this report so all advisers can get it for free.”