How to use platforms to get RDR-ready

Alastair Conway, sales and marketing director at Cofunds, explains why a good platform could be your launchpad for an RDR-compliant business.

What’s on your RDR ‘to-do’ list? To reach QCF Level 4 qualifications? To sort out a fee-based charging structure? To start preparing for the additional capital adequacy requirements?

How about implementing platform technology? Not a priority at the moment? Understandable, perhaps, but on the road to becoming RDR-compliant, moving client assets onto a platform could be one of the smartest and most useful moves you make.

As a Cofunds employee, you would expect me to say that. And the last thing you need, with only 18 months to go before the RDR deadline, is a hard sell from a platform provider. But do look around. Ask those advisers who have made the move to fee-based charging how they are using technology.

The next time you are in a room of IFAs at a conference, see how many ‘new modellers’ are using platform or wrap functionality to help manage costs, co-ordinate administration and deliver their advisory proposition.

Talk of propositions and technology can sound a little vague. So here are just a few of the very concrete ways that platform technology could help make your business RDR ready in the next 18 months:

Adviser charging

A commission-based adviser who has been used to receiving revenue direct from product providers faces the new administrative burden under RDR of collecting fees from clients themselves. Granted, the FSA has said that fees can still be deducted from products where the client and product provider agree to this, but IFAs still have to be sure they can accommodate whatever method of fee payment a client prefers.

Platforms can significantly ease the administration of adviser charging with features such as online cash accounts attached to client portfolios, automated unit encashment to cover fee shortfalls and fee calculation tools to ensure that ad valorem fees are deducted accurately.

The consolidated reporting features available on platforms can also provide clients with a ready-made record of fees paid over any given time period, alongside all other transactions across their portfolio.

Product coverage

Any adviser wishing to label themselves as independent now has to demonstrate knowledge and analysis across an increasingly wide range of ‘retail investment products’ (RIPs).

By introducing platform technology, most firms are in a much stronger position to demonstrate proper analysis across a broad range of appropriate products and funds. Granted, a firm may need to introduce more than one platform to demonstrate a comprehensive assessment across the full range of RIPs.

However, by harnessing platform tools, a firm can often be more sure that all of its advisers are following a robust, consistent and repeatable advice process for each client that can embrace a full universe of investment options.