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lang cat gives away 7-step approach to platform due diligence

5 September 2020

A 7-step structured approach to research and due diligence results in better client outcomes, the findings of the lang cat’s latest publication have shown. 

Following the launch of the consultancy’s due diligence software, Platform Analyser, it has published a white paper outlining a seven step approach designed to help advisers through the platform due diligence process. It comes after research found 82% of firms considered changing where they place their platform business at some point last year.

According to the paper Let the Suitable One(s) In, which is free to read, advice firms should first look at client segments, identifying their individual needs and the functionality that matches that segment.

They should then consider business information and pricing, including their preferences on financial strength, size and profitability and omit firms who charge too much. Once this has been completed, the lang cat recommends that firms make a shortlist of companies left and negotiate on price with those companies to reach a decision.

Finally, firms should ensure they have narrated each step, finalised the report and formally adopted it.

Mark Polson, founder, the lang cat, said: “There’s clearly a regulation requirement for due diligence processes to be undertaken and evidenced. In creating our Platform Analyser software and producing this paper, we hope to help more advice professionals to conduct their own robust research and due diligence process at an affordable cost.”

Polson said that while suggestions in the paper were based on the firm’s own experience of working with large advice firms, the firm recognised that the time and costs involved meant engaging with a specialist consultancy for bespoke due diligence was largely out of reach for smaller firms.

Polson added: “By outlining our process, and making the necessary data available in a way that can be easily compared and reported, we aim to help all advisers and paraplanners deliver the best possible outcomes for their clients with a bullet-proof, demonstrably objective approach to research and due diligence.”

The white paper can be read here.

7-step approach

The 7-step approach focusses on platforms as an example, but works just as well for CIPs, pensions, adviser tech and other adviser research requirements:

Client segments: First identify which segment you’re working on and their needs.
Functionality: Work out what functionality matches the segment and knock out platforms that can’t offer it.
Business information: Overlay your preferences on financial strength, size and profitability and knock out on that basis.
Pricing: Run a comparison based on typical scenarios. Knock out those who charge too much. Include any special deals you know about.
Shortlisting: The platforms left are your shortlist.
Final selection: Talk to the platforms, visit if possible. Negotiate on price. Make your decision.
Lock the report: Narrate each step, finalise the report, adopt it formally.

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