Transferring equities onto a platform

Evening all,
After some thoughts from the hive brain.

We have an adviser who wishes (for some reason) to transfer a clients single line equities onto a platform to be held alongside the funds we run for them.

What I can’t work out is if we were to do this, would we be taking on the responsibility for the ongoing suitability? I guess it may depend on what our service/fee covers maybe???

Ta muchly
Tony

Comments

  • sm2000psm2000p Member

    @T_Smith said:
    Evening all,
    After some thoughts from the hive brain.

    We have an adviser who wishes (for some reason) to transfer a clients single line equities onto a platform to be held alongside the funds we run for them.

    What I can’t work out is if we were to do this, would we be taking on the responsibility for the ongoing suitability? I guess it may depend on what our service/fee covers maybe???

    Ta muchly
    Tony

    I could be wrong but I believe that you will need to know that 'Reason' in order to provide the advice that will be required to put the assets on the platform. If the client has insisted they are put on the platform then that's different.

  • My understanding is that it is possible for you to hold equities on a platform for a client and not provide advice on them. You'll need to make this very clear on the suitability report, and it would not be TCF to charge an adviser fee on the shares (unless you're a stockbroker and you have the permissions to advise on shares).

    One thing to note is that if it's held on a platform, it will most likely be in a nominee account. This means that the platform provider will technically be nominee for the shares and clients could miss out on:

    • Shareholder perks, voting rights at AGMs, financial reports/statements being forwarded on, rights issues.

    I think most providers can facilitate passing on some of the above mentioned benefits however it's always worth checking and make a note of this in your report as a disadvantage (i.e. they will have to ask the platform provider for permission to access the above, which may not be granted).

    Another thing you'll need to check is whether the provider will allow the client to sell shares themselves. Unless you're a stockbroker, you're not likely to have the permissions/qualifications to sell shares so the clients would need to be able to do this themselves. I know certainly with some platforms you can request access for clients to place trades themselves with shares.

  • benjaminfabibenjaminfabi Moderator
    edited July 4
    "We have an adviser who wishes (for some reason) to transfer a clients single line equities onto a platform to be held alongside the funds we run for them."


    'For some reason' isn't going to read well in the suitability report. Especially given the significant differences and disadvantages the client is exposed to (as outlined by Andy - agree with everything he said) compared to holding the certificates directly.

    Even if you aren't giving advice on the shares, you can recommend a suitable trading platform to the client and administer the transfer, subject to their being suitable reasons for doing it.
    Benjamin Fabi FPFS
    Chartered Financial Planner

    http://twitter.com/benjaminfabi 
  • @T_Smith said:
    Evening all,
    After some thoughts from the hive brain.

    We have an adviser who wishes (for some reason) to transfer a clients single line equities onto a platform to be held alongside the funds we run for them.

    What I can’t work out is if we were to do this, would we be taking on the responsibility for the ongoing suitability? I guess it may depend on what our service/fee covers maybe???

    Ta muchly
    Tony

    Some of our clients like to consolidate shares for Inheritance tax purposes as it helps them get their 'ducks in a row' and provides more clarity on what the total value of their assets are (especially for people who have a shed load of old share certificates!). Other people like the functionality e.g. consolidated tax vouchers to assist with calculating their tax liability for self-assessment or CGT tools.

  • T_SmithT_Smith Member

    Thanks everyone. It does make sense from an ease of planning perspective to have everything in one place as you can then take into account the shares when looking at overall asset allocation etc.

    We'll be looking at suggesting a suitable platform for ease of management, though will not be recommending any changes, and keeping them in a sub account that does not carry an ongoing fee.

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