Written by Ian Partington, Group Chief Executive at Third Financial
In the dynamic landscape of wealth management and financial advice operations, selecting the right partner can be a critical decision. The consequences of a misstep can be costly, ranging from dead-end technology to unwittingly stumbling into a regulatory minefield.
It’s essential to know what to look for in a partner and what questions to ask to make informed choices that protect your clients and your business. We’ve laid out the following six-step process to help you navigate those decisions and avoid costly mistakes.
Listen to Sue and Brandon’s conversation with Ian on a recent IFA Talk podcast below – it’s already been one of our most popular podcasts to date with our listeners:
1. Is the platform firm stable and profitable?
Long-term partnerships are at the heart of wealth management, so it’s crucial to ensure that your chosen partner is here for the long haul. Stability matters, and this is closely linked to a platform’s ability to invest in developing its product. To determine this, take a close look at its audited accounts – a financially sound platform is more likely to withstand market fluctuations and meet its long-term commitments.
Profitability is another essential factor to consider. A profitable platform demonstrates that it can sustain its operations and growth without relying on external funding, like a third-party or a parent organisation. A profitable partner is more likely to be dedicated to your success, as their interests align with yours.
2. Do they have independently-verified assurance reports?
While not the most exciting reading materials, independently-verified assurance reports are crucial for your due diligence. These reports reveal the extent of sound operational and IT controls within the platform. Your duty of care extends to ensuring that your clients’ assets and data are not exposed to unnecessary risks. A platform with robust controls is better equipped to protect your clients’ interests.
3. Are their CASS audit reports reassuring?
Client Asset Sourcebook (CASS) compliance is a critical aspect of any platform’s operations. To gauge the platform’s commitment to CASS compliance, you should examine their audit reports. However, it’s not enough to just look at the reports; you also need to scrutinise the credentials of the auditors themselves. A trustworthy auditor can provide an extra layer of confidence in the platform’s compliance efforts.
4. Can you speak to a wide range of their staff?
Technology may lie at the heart of a platform, but it’s the people who truly make the difference. To gain comfort in your choice, ensure that you can speak to a variety of its staff members. This process allows you to assess their knowledge and expertise in their respective areas. Don’t be hesitant to request meetings with them and ask probing questions about their roles. The reassurance you receive from these interactions can be a significant factor in your decision-making.
5. Will they allow you to speak to existing customers?
Understanding the experiences of existing customers is a crucial part of your due diligence. A reputable platform should be willing to let you interact with its clients, chosen by you. Ideally, these clients should have a similar profile to your own. Speaking to other users can provide invaluable insights into the platform’s performance, customer service, and overall suitability for your business.
6. Do they own their own technology?
Ownership of technology is an essential consideration. If the platform does not own its technology, it’s important to identify who does. This inquiry can help you determine the level of control and stability in the platform’s technology infrastructure. Additionally, it’s crucial to be able to speak to the technology supplier to assess their controls, development plan, and the adequacy of their funding. This information is vital for understanding the potential risks associated with technology dependencies.
In conclusion, due diligence is not a one-size-fits-all process; it’s a multifaceted approach that involves careful examination of various aspects of a potential partner. By asking these questions and conducting thorough due diligence, you can make informed decisions that protect both your clients and your business from costly mistakes and regulatory pitfalls.
