Help with choosing an investment platform

In the first two posts of this series, we looked at what a platform actually is, and how to go about choosing one. Today we conclude this mini-series by looking at how to get help choosing an investment platform.

Look for the Cat

If you’re ready to start using a financial platform, the best place to look for information about them, other than the platforms themselves, is in a free guide from a company called The Lang Cat. You’ll need to provide your email address, but you won’t be spammed. The guide (called Come and Have A Go – they're quirky like that) is regularly updated and is a great starting point for finding a platform with a charging system which agrees with how you’ll use it.

Suck it and see

You may find that you have to try a platform and see how you get on before you can make a decision. It’s not irreversible, so think about starting off with a small amount of money as a test. Try the dealing systems and see what you think of the reporting – do you like the information you get?

Give it a couple of months to see what kind of information you get from the platform. Is it reliable and can you log in to the site whenever you want? Do your homework and you stand a good chance of getting it right.

A quick nod to my US readers: I know that the platform market over the pond is different and you manage your investments via custodians or wire-houses, which I think are managed by brokers and advisers. From my perspective, the nearest US equivalent to the DtoC platform I’ve been talking about is custodian, and the nearest to an adviser platform is the wire-house.

Rise of the Robo-Advisers

Finally, a note on Robo-Advisers. Both in the UK and the US is something an emerging trend known as a Robo-Adviser, which is an unhelpful term. They’re also not advisers at all. The first wave of these look more like robo-investors. They ask questions about your risk profile and present you with a portfolio to choose or tweak, which is a good first step.

The whole robo-advice world is fraught with regulatory uncertainty, and the regulator is struggling to move with this rapidly-advancing tide of technology and make sure that people are protected. If you want to go it alone with your investing, avoid robo-advisers for now, because they’re just basic platforms with an overlay of intelligence on top. But watch this space.

A platform is a tool

Remember: a platform is just a tool to make your life easier, and one could argue that if you’re just going to buy one fund, with one provider, in one kind of account, you don’t really need a platform – you could write a cheque to the fund house in the same way people always did.

Most people, though, will benefit from the flexibility a platform provides. Just remember that that flexibility comes at a cost, so make sure that it’s worth it for you. Having multiple accounts and flexibility can be a boon, in the right situation.