How did/do you choose your Investment Platform?

Over the years, I have been hearing many views given by professionals in the industry and clients alike, about different investment platforms.

The main debate is always around the costs of a platform, costs usually associated with advising and arranging a solution (commission payments).

When choosing an investment platform, there are a few key points to ask the provider:

- Where is it domiciled?

- Who is providing the custody for the assets?

- What happens to the assets if the account owner dies?

- What type of assets can one purchase through the platform?

- What kind of tax implications, can there be by holding assets into a particular platform (capital gain tax, income tax, death tax etc.).

- What is the level of portability?

- Can it be used for lump sum as well as regular contribution investments?

- Can it hold multiple currencies?

Like in any other purchase of a product, service etc, we will always pay a premium for a more versatile platform. The moment you start adding features such as “life assured” which allows you to appoint beneficiaries, excluding, by doing so, the asset (platform) from probate, “open architecture” which allows you to capture any tradable assets in the financial markets (funds, bonds, stocks, ETFs, multiple currencies), “segmentation” which allows you to gift portions of the platform to whoever you want, “portability” which allows you to manage it through a broker, change it (the broker) or fully independently (by yourself), the price (of the platform) tends to go upwards.

In plain English: you can reach a destination in any car without walking however, if you want a multitude of airbags, ABS, power steering, ESP, leather seats, AC, etc. you start adding “extras” which come at a price. Also, if you want a car that is comfortable, safe, dynamic, you will pay a premium for a brand that offers all of the above. You can eat in a fancy 5* hotel in a fine dinning way (and pay a premium) or you can eat in the fast food at the corner of your building. Both would cover the need of feeding in different ways, at different prices.

Following the above examples, there are very cost-efficient platforms which will allow you to invest your money, by using a limited universe, will become part of your estate upon death and subject to probate, while there are sophisticated platforms, which will allow you to invest your money in an “infinite universe”, while you can also do a bit of tax planning and succession planning (just to name a few of the differences) which will not be able to be called "the cheapest" solution.

Always make sure the provided solution (platform) fits your needs, you are aware of the costs and “rules of engagement” of a given platform and you are comfortable with it. In order to do so, if not provided by the broker (adviser) already, do ask for the "Key Features Document" and the Terms & Conditions, which will highlight all the features along with the "rues of engagement". Also, make sure a "fees & charges schedule" form has been presented to you and your wet signature has been requested on all of the above mentioned documents.

Regardless, a sophisticated or basic platform will not guarantee any growth on your investments. While fees and charges can have an impact on the growth of a given portfolio, the choice of assets, allocation and management, are the ones determining the performance of an investment, as mentioned in a previous post.

Invest wisely!