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NEXT ARTICLE Estate Planning

If you see a financial adviser these days they will more or less demand that you invest via a master trust or wrap account, otherwise known as an administrative platform. Your adviser might even offer you a choice of platforms, with a different selection of managed funds or shares on each.

Platforms can be confusing to the uninitiated. That’s because many think of a platform as a product when really it’s just an administrative package, like an Excel spreadsheet that records all of your share purchases. Platforms keep track of the managed funds and shares you hold, including buys and sells and switches between products, income and capital gains made over the financial year, and produce reports on your daily net wealth.

Financial advisers love platforms because they shudder at the thought of recording all of this information manually. Not only would the process be time consuming, it would be costly for the adviser’s firm. Advisers therefore have an incentive to steer investors into platforms, but when doing so, they pass on the cost of the platform to you.  

Platform costs are roughly comparable to the yearly premiums you pay on your car insurance, which covers you for all accidents that occur, however major. So what services does a platform offer you in comparison? Well, it allows you to view your current investments and returns online, and download tax reports at the end of the financial year to take to your accountant.