Our due diligence reg tech tool Platform Analyser has been going for a while now (16 months to be precise), and that means we’re compiling lots of lovely data that we can play with and interrogate.

Among the insights we’re gleaning are the factors that are most important to advisers, planners and advice professionals when it comes to choosing their platforms.

This is a snapshot of how things are looking just now, based on just over 400 completed full due diligence exercises. Over time we may see any or all of these aspects come to grow in importance or fall away in favour of more topical criteria.

It’s important to stress this concentrates on the scale and ratings-based criteria data, once Platform Analyser users have already screened features. We also apply subjective and experience factors at each phase of our screening process. And of course price comes into things as well. So while this is a snapshot of one part of the platform selection story, we believe it’s a key one.

So what does our latest analysis tell us?

1) Service rating is (very marginally) the most important business analysis measure

Only 24% of the firm reports we analysed said service wasn’t relevant to their platform due diligence process. Of the remainder, 53% required a minimum rating of above three out of five.

2) Profit is in the same ballpark as service

In 75% of reports, firms required a platform’s parent company to be profitable in order to make it to the next stage of due diligence. When it comes to the platform business itself, profitability was a requirement in 69% of reports.

This one is interesting, as it proves profit is important to advisers in actual, real-life decision making. I’ve secretly wondered at times whether questions about platform profits were maybe more concerned with appearing clever, especially when there’s so much smoke and mirrors involved in these things. But now I’m not so sure.

It’s a finding that is backed up by what advisers are telling us anecdotally – the sustainability of a potential platform provider is becoming more important to clients than price. And significantly, this is coming up more often since the pandemic.

The caveat to all this is the data spans a relatively short time period, and a period dominated by the pandemic at that. So although there looks to be a slight increase in the importance of profit this year compared with 2020, it’s too soon to know if the last year has had a specific impact on these numbers, or whether profitability has always been key.

3) AKG rating is important to almost 60% of advice professionals

The AKG rating is an indicator and assessment of a platform’s financial strength.

Some 43% of Analyser users marked the AKG rating as not relevant to their due diligence. Among those firms who use it as a selection criteria, many opted for a rating of B- or above, with 27% requiring a rating of B or above.

4) Scale is the least important thing (based on our screening criteria)

A platform’s share of the market is deemed not relevant for 71% of users in choosing their platforms. A further 52% say the same about assets under administration (AUA), so while assets still matter, they don’t matter as much as other criteria.

What informs your platform selection? How easy do you find it carrying out your due diligence? If you could do with help getting it all in order have you looked at our due diligence white paper? Or make it even easier for yourself and try a seven day free trial of Platform Analyser.

Terry