Thoughts and Musings #1 – Graham Muir
Mark Twain once said ‘Get your facts first, then you can distort them as you please’.
While it would be a gross distortion to suggest that the findings of the FCA’s recent Thematic Review (the catchily titled ‘Assessing suitability; Research and due diligence of products and services’), were that advisers were distorting facts in justifying their selection of products and services, the message from the FCA was clear – firms cannot place the level of service they receive as a key factor ahead of the level of service received by their client.
The FCA’s review also unearthed ‘inconsistent and insufficient research and due diligence in the selection of platforms’ and went on to observe that some advisers demonstrated ‘status quo bias’ (no, not a penchant for 80’s soft rock!) and an ‘if it aint broke don’t fix it attitude’.
Perhaps worst of all is the finding that some firms selected criteria for their due diligence based on platform features that would make their existing platform come out as the preferred option – hardly an objective assessment!
So what does this mean for the SIPP market? For more years than I care to remember, we have been extolling the virtues of separating the SIPP wrapper from the investment platform and we are (finally) starting to see clear traction for this principle amongst the adviser community. The ability (and perhaps requirement) to change investment platforms, utilise multiple platforms and to supplement a SIPP portfolio with DFM, direct property investment, structured products etc. can surely best be achieved via a pure SIPP operated by a specialist provider?
A pure SIPP allows access to multiple platforms and asset classes; allows the client and their adviser to switch platforms without having to move the SIPP and, perhaps most importantly of all, goes a long way towards demonstrating to the FCA’s satisfaction that there is a robust research and due diligence process in place that delivers the best consumer outcomes.
For too long now it has become accepted wisdom that functionality and cost are the drivers for platform based SIPPs. The availability of flat fee based, independently managed, pure SIPPs, backed with personal service and strong technical support means that the landscape is changing rapidly.
To return to Mark Twain, ‘do the right thing. It will gratify some people and astonish the rest’.