Applying due diligence to finding the right platform is notoriously difficult. Will planners find the perfect panacea or a poison potion? Geoff Mills, of ratings company RSM, suggests some questions to ask.

Discussion of the benefits of platforms continues apace and some see wraps and platforms as the panacea to the many issues that have beset our industry.

Of course a platform is not the sole answer to transforming a Financial Planning business - any more than moving adviser remuneration to fee charging is the answer to stopping inappropriate advice being given. A platform can however play a part in helping a firm reposition its business model by improving its service proposition, streamlining the provision of data across a number of products or tax wrappers and developing more efficient administrative processes.

The regulatory landscape continues to change and there are still some unknowns around the longer-term impact of the ban on cash rebates on advised business let alone the knock-on impact in the direct to consumer (D2C) space.
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The financial resources available to a platform operator to back its proposition is a key factor in any selection process when return on capital employed (ROCE) has in most cases been non- existent. With the continuing focus on margins, the financial pressures on platform operators are unlikely to ease in the short term.
League tables of assets under advice (AUA) serve little purpose in selection, buoyed as they are by stock market activity rather than any real indicator of service support, user engagement.
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Key Points
or profitability. Perversely, when the value of AUA increases, say through an improvement in the stock market, the platform gains more revenue yet does nothing for it - is that treating customers fairly?
Yet to some extent size does matter, but be wary and probe about profitability, commitment and the level of resources available to support ongoing (and expensive) IT development. As we will see later there is no real substitute for engaging with a platform operator at the highest level and seeing the 'the whites of their eyes'. You have to make a business decision based on the needs of your business, rather than be swayed by some whizzy tool that might be used once. In our view, a platform is about administrative support, dealing and custody - plain and simple.
Selection process
Firms are looking for a logical process to follow which will allow them to decide on two important points; is a platform right for my business and if so, which is the right one?
The process starts with a review of business strategy and this step will help determine whether a platform solution is suitable to achieve the longer- term business objectives.
The following diagram illustrates the whole process following this initial strategic review. Let's look at each step:
Step 1 – Review of Business Strategy
The starting point for considering whether implementing a platform is right must be to review the current business strategy to determine how the use of a platform would fit in with and enhance the business and advice process.
Step 2 - Market Analysis
Having made the decision that a platform is right for the business and its clients, the next step in the process is to analyse the market.
The starting point should be to have a broad overview of all the main players in the platform market looking at what is offered from each one.
It makes sense to only consider using those platforms that have the entire product and tax wrappers that are used on a regular basis. With regard to fund choice, while whole of market coverage would appear more attractive, in reality those with a more limited fund range may include all the funds that are generally needed.
A number of the platforms have the ability to include other assets such as existing funds or alternative investments such as property or other assets. While the ability to include these assets in the clients' overall wealth is useful, consideration should be given to how these assets are valued as most of the platforms that include this facility require the adviser to provide and maintain the information – either the valuation or the number of units held or so on.
If pre-set portfolios are used, then the availability of the portfolio funds should be considered together with the ability to set up and administer the portfolios on the platform.

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Step 3 - Shortlist & Due Diligence
From this market information a short list should be compiled. This should be based on matching the services offered by the platform operator with those required by the business and the client base.
Once the shortlist is in place, we would suggest that full due diligence is completed on each of the shortlisted operators. There are a number of key areas that should be looked at in the due diligence process, these include:
Financials
A number of the platform operators are yet to move into a profit making situation, so the financials need to be carefully considered to ensure that the proposition is sustainable and that the operator has the financial capital at its disposal to continue future developments.
The ownership of the platform should be looked at and, where it is owned by an insurance
received by clients, and how successful any migration onto the platform has been. As part of your TCF strategy you will already be seeking feedback from clients and their experience since the adoption of your chosen platform should now form part of that feedback, with any issues in these areas being highlighted and resolved.
Secondly, review the service from the platform operator and if there are any issues here, then clearly they need to be taken up with the operator and an action plan put in place to resolve them.
company, the stance taken by them should also be considered to determine whether they are totally committed to continuing to back the proposition.
You might want to refer to the Platform Financial Strength Ratings from AKG.
Service Support
The levels of service and support vary quite substantially between the different operators, and it is important to understand what support is available, particularly in the transition onto the platform, in order that this can be matched with what you require. Ongoing support should also be determined, whether this be face to face, or telephone based, to ensure that it will meet the needs of the business, together with exact support and training provided during the set-up and implementation process.
Step 4 - Decision & Implementation
Taking all this information together, you should now be in a position to make a decision as to which of the available platforms will be best suited to the needs of your business and your client base.
Once this decision has been taken, we then move into the implementation stage.
Implementing a platform strategy can mean simply a straightforward change in the advice process, that is deciding the client circumstances in which a platform will be considered, or it can be a fundamental change to the business involving putting in place a new advice process. It is in this second scenario where the benefits of a platform will most clearly be seen.
We would expect the chosen platform operator to offer support during the implementation process and they should be challenged to provide evidence and testimonials of successful implementation with similar sized firms so that this can be verified.
Always seek testimonials and contact firms to seek comments on their experiences.
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Step 5 - Review & Monitor
The final stage in the process is the review and monitoring step. Clearly this part of the process is ongoing but it is often useful to set a specific time to review the progress of an initiative such as this.
The review should consider the business objectives and strategy which were considered in step one and any changes that have been made to them in the intervening period and should determine whether the chosen platform proposition continues to be the right approach to meet the objectives and to fit with the agreed business strategy.
The second stage of the review is to look again at the platform market, and at the developments that have taken place to ensure that the chosen platform operator remains competitively positioned in the market, and continues to develop the overall proposition in line with expectations.
Finally, the service experience should be reviewed regularly. There are two aspects to this – firstly, and arguably most importantly, the service experience of the client. The review should consider whether the service improvements that have been made are