In our opinion Platforms are a good thing.

As a client, if a Platform does what it says on the tin, then it will give you a single view of your wealth; you can see exactly what you are worth at any given time while you and/or your Financial Adviser can easily keep on top of your portfolio and ensure it continues to meet your needs over the dramatic course of events that unfold throughout your lifetime. As an Adviser or Broker the Platform gives you the power to provide this fantastic level of service to your clients extremely cost-effectively.

Arguably, Platforms are a cornerstone of the Retail Distribution Review, apparently the FSA thinks so (see later).

But there is a problem … In-Specie Transfers aka Re-Registrations. This is the administration headache required to transfer control of the assets in a clients portfolio from a variety of different providers onto a single suitable Platform without having to sell and repurchase those assets. This can take days, weeks, months or, as legend has it, occasionally over a year! All this time, those assets are out of the market, can potentially attract Capital Gains Tax  and of course all of the parties responsible (Advisers, Brokers, Platforms etc) can suffer damage to their reputation in the market.

In terms of raw cost to an Advisory business, a recent survey from CWC Research puts the number at £600 to transfer each client onto a Platform!

Think about that again … if an Adviser has 250 Active Clients suitable for Transfer onto a Platform (this is a perfectly reasonable industry assumption) then it could cost their Firm £150,000 to Transfer those Clients onto that Platform while risking reputational damage as well! Yes, that’s £150K per Adviser. It’s equivalent to sacrificing a whole years income from each Adviser in order to reach the promised land. There’s no wonder the flow of assets onto Platforms has been somewhat slower than hoped.

Something just has to be done about Reregistration and both the industry and FSA have recognised this and are now acting.

I was even  inspired to draw a cartoon on the subject …

Eliminate the Re-Registration problem and watch legacy assets flow!

The answer is electronic messaging using the ISO 20022 standards (this steer was set by the UK Platform Group in the latter half of 2009) coupled with the automation of the various administrative processes involved.  Over the coming months, CBoxx and several of our key clients will be working at the coalface to help deliver this vision.

The industry is acting at present under the guidance of the unappealingly named but highly organised Tax Incentivised Savings Association (TISA). Last December I was privileged to attend the most recent meeting of the TISA Re-Registration Committee along with many of the great and good of the industry representing Platforms, Advisers, Fund Managers, Registrars, Third Party Administrators, Software Providers, Service Providers and Not-For-Profit Industry Organisations.

Also present was Steven Tully who stated the view of the FSA very clearly to all present:

• The FSA welcomes this initiative, and would prefer to see an industry-led solution to the re-registration issue;
• They are, however, clear that they wish to see re-registration happening across the industry as soon as practicable;
• If this does not appear to be happening, or if progress appears to be slow, they will move to take more prescriptive measures.

In short, if the industry doesn’t get on with it then the FSA will act decisively and we won’t like it! As they see it, the lack of an industry solution to Re-Registration could undermine the RDR.

Doubtless the journey ahead will be fraught but at present I can see no good technical reason why Re-Registration can’t be automated and that £600/client barrier removed. Perhaps the tricky part is that it will require a lot of co-operation between the parties concerned and there are conflicts of interest to be resolved.

When permitted and appropriate, we will continue to update this blog with updates on the progress we are involved with.