The third quarter 2012 Skandia Adviser Confidence Barometer survey, which asked 627 advisers for their views in August this year, found that 48% of advisers believe you can be independent and use one main platform, with 40% believing the opposite to be true and 12% “not sure”.
Skandia said the results show a high level of uncertainty regarding platform use and its impact on independence.
The UK’s Financial Services Authority said on the issue: “We expect it to be very rare, if possible at all, that a firm could use a single platform for all of the investment business of its clients and meet the standard for independence advice.”
However, Skandia points out that the FSA also said an independent adviser can use one ‘main platform’ as long as they consider its suitability for each client and offer access to other platforms or off-platform assets where appropriate. The provider said: “Therefore, the 48% of advisers who believe you can use one ‘main platform’ and remain independent are technically correct.”
Extremely common
The research also revealed that it is in fact extremely common for advisers to use just one main platform, with Skandia finding this to be the case for 40% of advisers interviewed, while 35% said they use two main platforms. Meanwhile only 1% of advisers (7 of those interviewed) said they use a large number of platforms.
Skandia said this supports the findings from financial research company Investment Trends which found advisers use an average of 2.2 platforms for each new inflows. Investment Trends also found that being an adviser’s primary platform is critical as advisers place a huge 77% of new platform flows through their primary platform, with 17% going to their secondary platform and just 6% going to all other platforms combined.
Perhaps worryingly for some platform providers, Investment Trends also said the top three platforms hold more than half (51%) of primary adviser relationships, suggesting that for the majority of their customers, financial advisers are looking for a platform that offers a wide range of funds which they can use to build customer portfolios at a competitive cost.
Skandia also said its own research revealed it is unlikely the number of platforms an adviser will use will change after the implementation of the Retail Distribution Review. 72% of advisers state their model will stay the same post RDR, but interestingly, 20% say they will start to use more platforms post RDR. 8% claim they will use fewer platforms, perhaps indicating that these advisers are looking to offer a restricted advice model.
“Hopefully advisers will be reassured that they can use just one main platform without jeopardising their independence status provided they can justify individual suitability for their clients each and every time,” said Skandia’s marketing director Nick Dixon.
“Using one main platform is already common, and over three quarters of advisers are believed to be using one primary platform. For all platforms, winning primary relationships with advisers will be crucial.”
Do you use platforms? Do you think an adviser can remain independent if only using one platform? Let us know using the comment box below.
