7th April 2009

Ascentric turns spotlight on due diligence

Ascentric, the independent wrap platform, stresses the importance of IFAs undertaking regular due diligence on the platforms they use to make sure they remain suitable for clients and fit for purpose.

Shaun Sandiford, Ascentric’s Head of Sales said, “You only need to look back over the past year to see the degree of change that has impacted our regulatory landscape and the platform world. With all the pressures involved in running a business and keeping clients happy, IFAs have to devote more and more time ensuring that the appropriate governance is in place to justify any major decision they make. This includes their selection of a wrap platform provider.”

Back in January 2008 the FSA lexicon for wraps was defined by the need to be ‘whole of market’ but by the end of last year the language had changed and become more defined. The expression ‘unbiased and unrestricted’ was introduced through the Retail Distribution Review.

From a wrap perspective this phrase represents the need for IFAs to provide clients with a freedom of choice in terms of access to products as well as the freedom to transfer assets on and off platform. This freedom underpins the ultimate desire on the part of the FSA to ensure that product recommendations are based on a full understanding of the market.

“The upshot of this change means a wrap that was suitable in January 2008, when it needed to be whole of market, may no longer meet the demands of an ‘unbiased and unrestricted’ world, especially for IFAs wishing to position themselves as truly independent advisers”, added Sandiford.

Sandiford says financial advisers should be asking themselves some key questions regarding their chosen wrap platform. For example:

• Has your firm’s investment philosophy changed in 2009? If so, is your existing platform able to provide the breadth of investment coverage that best reflects that change?
• What about protected rights and ongoing protected rights planning? If the SIPP available on your wrap does not allow protected rights, will you be able to provide your clients with effective financial planning?
• What gaps in functionality does your platform currently have and are these likely to change in the future? Does the current functionality fit with the concept of ‘unbiased and unrestricted’?
• If you decide to change your business model to meet the requirements of an ‘unbiased and unrestricted’ world, will your platform put barriers in your way and limit what you can transfer off platform?

Sandiford concluded, “Why wait for regulatory sanctions when you can do something about it now? Spring clean your wrap operator, spring clean your preferred platform, and, if you feel it remains fit for purpose, fine, document why and carry on. If it’s not, investigate others, do your due diligence and make the move to an ‘unbiased and unrestricted’ world.”

For further information, please contact:

Ascentric
Dominic Ventham
Head of Marketing

Tel: 01225 787208
Mobile 07590 227039

Email: dominic.ventham@ascentric.co.uk