Investment platforms are essential to many advice firms’ centralised investment proposition. To meet regulatory expectations and client needs, advisers must thoroughly document their selection process. Importantly, firms should distinguish between initial research and in-depth due diligence, focusing on a short-list to find the best-fit platform.
A key takeaway from the Consumer Duty is the need for personalised due diligence. Firms must evaluate their client base and establish their clients’ circumstances and objectives. This informs the selection of products and services that best align with client goals.
The regulator has critiqued the ‘one-size fits all’ approach, and emphasised the need for advisers to document the ‘why, where, when and how’ a platform meets client outcomes. Structuring platform due diligence into clear requirements and aligning these with the advice journey is crucial.
An approach might be to look at these examples:
- Critical considerations:These apply to all products and services – financial strength, industry track record, charging structure, and Consumer Duty support.
- Important platform factors: Product wrappers, available investment solutions, transfer/payment process, and service delivery.
- User experience enhancements: Technology integrations, business MI, client reporting, and client communications.
Outlining these requirements before analysing the platform market is important when clarifying what an advice firm needs from a platform. Not only does it help ensure good client outcomes, but it also streamlines the process and saves the adviser time.
DD|hub offers a structured approach for documenting and maintaining platform due diligence. It features 256 pre-populated questions, peer reviewed by compliance specialist, threesixty, allowing firms to personalise their due diligence by only selecting relevant questions.
Advice firms can score platform responses and flag areas to raise with the provider, strengthening the rationale behind platform recommendations. While this may seem demanding, the long-term benefits include stronger justification for platform selection and a greater knowledge of the platforms a firm is using amongst its advisers.
Having a robust due diligence framework means firms spend less time reassessing platforms during subsequent reviews. Consumer Duty requires advisers to stay informed, and know what has changed, since their last review. DD|hub supports this with practical tools including:
- A provider ‘follow’ function: A notification system for changes in provider information, and
- A question review feature: Resetting scores when new information arises, prompting reviews, and retaining scores when responses remain unchanged.
Post Consumer Duty, the mindset around platform due diligence has shifted. Advice firms must not only document their due diligence but demonstrate ownership of it. DD|hub is designed to support advisers with this transition, ensuring they stay compliant and well-informed.
If you have a query or feedback due diligence, please contact our Research team, or DD|hub if you would like further information on how DD|hub can support your due diligence process.