Perfectly platformed

A lack of platform comparison tools on the market led Bella Caridade-Ferreira to create her own. Here, she explains how and why…

Five years ago, I spent several days trying to identify the right investment platform for my personal needs. While the breadth and depth of my then-current proposition was superb, at the back of my mind was a nagging feeling it was expensive and would cost me more in the long run.

For me, price was not the only consideration, but it was a good starting point. I also wanted a platform with plenty of tools and research, and access to a wide range of investments and solutions.

I spent hours scouring ratecards and putting numbers into a spreadsheet, but was dumbfounded to realise there were too many variables to accurately compare and contrast platform prices. It was my moment of epiphany – if I was finding it difficult, then other consumers must be equally bewildered.

Complicating matters

The truth is, we do not make financial services easy for consumers to understand. We like to use jargon, offer complicated terms and conditions, and set things up in such a way that consumers inevitably feel stupid or afraid to ask the wrong questions. And while most investors understand what funds do and the management fee involved, many are not aware that there is a platform charge to consider.

Before starting, we searched the internet for platform price calculators and found nothing apart from static pricing tables. These static tables can, in fact, be dangerously misleading if certain information such as regular trading or holding a large percentage of the portfolio in exchange-traded investments is not taken into account.

Free for all

We decided to launch a calculator that would be free for use by all consumers, advisers and platforms. Our aim was to make it accessible, independent and free of charge so that the users who needed it the most, could access it freely. This model has also allowed us to remain independent and free of distributor influence – platforms cannot pay to appear higher on the lists, that is not how we work.

We give platforms free access to their own data, so making sure the data is correctly updated becomes a shared responsibility. It is in their interests to make sure that we always have the most up-to-date information, and we can do this by giving them access.

How we make money

Our aim is to provide a free tool that gathers statistically relevant trends and data (always anonymised and aggregated) to underpin focused and insightful reports on investor needs, products, portfolios sizes and much more. These reports can then be sold to fund groups, platforms and other stakeholders to help them design better, more innovative products for advisers and their end consumers.

How advisers use the tool

The tool is free and there are no usage restrictions, so advisers can check their preferred choice of platform is still suitable on an ad hoc basis, as well as the more stringent due diligence checks that advisers must conduct on an annual basis to satisfy themselves (and the regulator) that the platform(s) they have chosen for each investor segment are the right ones.  

Our aim is to provide a free tool that gathers statistically relevant trends and data to underpin focused and insightful reports on investor needs, products, portfolios sizes and much more

Advisers can store composite client reports and due diligence reports online and they also have the ability to save, print or email their reports.  

Most advisers believe that platform charges are broadly similar, but they often find out to their surprise that a basic ISA portfolio can have charges that vary significantly. For example, a customer with £50,000 in ISAs, but who trades ETFs regularly, could be exceptionally expensive on certain platforms and not on others.             

Talking to the customer

When recommending platforms to new or existing clients, the adviser can also use the calculator to provide context on the dichotomy of charges in the profession, and can also ask end investors to verify their platform selections by independently verifying their selection through comparetheplatform.com

Next steps

Comparetheplatform.com is a work in progress that is continually being polished and enhanced. Following platform and adviser demand, we will also be introducing the option to add the investment portfolio and see how those charges might fare across the breadth and depth of the platform industry market. The regulator has made it known that it wants platforms to be more transparent and to negotiate better deals with fund groups. Combining platform fees with investment prices will allow us to provide far greater transparency in this area and will give advisers a complete and accurate view of a customer’s total investment charges – many would call that a game-changer that will open up this pretty murky part of the investment world to greater scrutiny, driving competition across the board.

In the pipeline

This is just the beginning. We have several calculators launching in the coming months – an exit charge calculator, a drawdown calculator and even a robo-calculator for those that are more tech-minded. To find out more about the calculator and these new developments, please visit www.comparetheplatform.com and sign up to our newsletter.

Bella Caridade-Ferreira is CEO of Fundscape Comparetheplatform.com is a Fundscape brand

Image Credit | iStock