21st April 2011

Defaqto: 24% of advisers believe using one platform will jeopardise independence

A survey by independent financial research company Defaqto has found that nearly a quarter of advisers believe using a single platform will compromise an IFA's independent status - and 8% are still unsure.

In the context of the Retail Distribution Review, one of the principal concerns for advisers is whether or not using just one platform will allow them to provide unrestricted and therefore independent advice. And while the FSA has sought to clarify this issue, Defaqto's survey has found that many advisers remain uncertain.

At the same time, 68% of advisers questioned by Defaqto believe using a single platform would not affect an adviser's ability to remain independent.

Interestingly, and potentially reflecting advisers' views on single platform use, Defaqto's survey also found that the number of IFAs using only one platform has fallen from 39% in 2010 to 31% this year.

Fraser Donaldson, Defaqto's Insight Analyst for Funds, said:

"Our survey has found that although the majority of advisers do not believe single platform use will compromise adviser independence, a significant minority have concerns in this area or remain unsure. It is fair to say that the regulator will be keeping a close eye on those adviser businesses that are only using a single platform to ensure that it is suitable for all clients on it.

"From an IFA's perspective, selecting a platform that will meet the needs of all clients on it will be the critical factor. On the flip side, a clear message for platform providers and fund supermarkets is that they will need to give IFAs unrestricted access to the market if they want to remain an option for independent advisers. An additional challenge in this regard is the RDR's widening of the range of retail investments that must be considered by an IFA to remain independent."
Defaqto's survey of 232 advisers using platforms asked about their platform use and level of service satisfaction from the platform providers they deal with. The results of the survey have fed into Defaqto's Market Briefing on Platforms, published today, which covers the platform regulatory and industry landscape, platform service and IFAs' platform selection activity.

To help advisers with platform selection, Defaqto's IFA research tool - Engage - includes Star Ratings on each platform provider. Each provider is given a rating of 1 to 5 based on the results of Defaqto's IFA platform service satisfaction survey. Defaqto also provides bespoke consultancy services for IFAs, including assistance on platform due diligence.

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