Finding the right investment platform

We did a ‘deep dive’ investigation to discover the best investment platforms to recommend to our clients. This article tells you more.

Investment platforms, sometimes known as ‘wrap platforms’, are services which enable clients to hold all their investments in one place, usually with the ability to split them between different types of account if needed; such as Individual Savings Account (ISA), pension or general investment account. The platform provides a single point of administration for any number of different underlying wrappers and investments.

Investors and advisors can usually access details of these client accounts online and platforms can facilitate the buying and selling of assets. This enables an investment portfolio to be centralised and simplifies the process of monitoring it and making changes to it. Platforms may also give clients access to discounted fund charges and enable us to keep trading costs to a minimum.

Since the first platform was introduced to the UK in 2000, a plethora of providers have joined this market and we have undertaken an in-depth research project to identify the most suitable platforms available to our clients.

What we did

Initially, we undertook a whole market review to establish what options are available, what tools and support they offer and how the different options compare. Key features we examined at this stage included whether the platform could provide valuations of assets that are held elsewhere (such as employment share plans), Capital Gains Tax reporting and simple rebalancing to a model portfolio. This created a shortlist of potentially suitable platform solutions.

We then scrutinised the shortlist at a fine level of detail, and examined the following areas:

  • Value-for-money proposition, taking charges into account alongside features of the service. The platform should provide benefits beyond those which can be achieved off-platform, with a transparent charging structure.
  • Financial strength, corporate stability and profitability of the platform company. These factors are key to ensuring the platform offers a long-term solution to clients and is not likely to go out of business.
  • The range of tax wrappers and securities available. Clients should be able to access key account structures that facilitate efficient tax management. The platform should also offer access to a broad range of funds and individual securities so as not to restrict the investments that clients can make.
  • Meet or exceed all Financial Conduct Authority (FCA) regulatory requirements and industry standards of best practice.
  • Legacy assets can be transferred in and subsequently restructured. This allows clients to remove legacy assets in a tax-efficient way, or to maintain them if preferred alongside new investments.
  • Options in place to allow cash balances to achieve competitive interest rates. Cash balances should earn as much return as possible to enhance client outcomes.
  • Consolidated reporting across the client’s whole proposition. Allows client and advisor to review the investment portfolio as a whole.
  • Performance measurement functionality. Enables client and advisor to track portfolio performance against goals and relevant benchmarks.
  • Asset mapping functionality. Enables client and advisor to monitor portfolio structure and ensure it remains appropriate.
  • Full online administration/implementation functionality for planners and end client, including CGT tracking and the ability to rebalance to model targets. Ensures timely implementation of required changes, simplifies administration for both client and advisor.
  • Access to resources providing technical and administrative support to the advisory business. Enables the advisor to deal with any problems or other issues on the client’s behalf.

This deep dive created a large database of information that allowed us to compare the advantages and disadvantages of the platform providers, with the key consideration of cost to the client always in mind. A short list of five providers emerged, all of which met the strict criteria that we had applied at an attractive cost compared to the market. Of these, two had recently undergone a change of ownership and so were ruled out although we continue to monitor whether any changes to their service levels will be made as a result.

We will evaluate which of these is most suitable for you, depending on the size your assets, your specific requirements and the characteristics of your investment portfolio.

Lance Baron

Certified Financial Planner (CFP) based in East Sussex, UK. We support people in Southeast England with more than £500K to invest by building a financial plan that will help them live the life they want… until age 100