Does your adviser use a LISP?

This headline might sound like a question about your financial adviser's speech patterns. In the world of investing, however, it's about whether or not your adviser uses an investment platform, also known as a Linked Investment Services Provider or LISP.

By Lize Visser

26 Oct 2015

Lize Visser, Head of Sales at PSG Wealth

Using an investment platform gives investors access to a wide variety of investments, such as unit trusts from different companies, through one channel. It also gives investors the opportunity to easily switch between different investments, and provides administration benefits to both investors and advisers.

A LISP also gives you and your adviser access to traditional life insurance products such as retirement annuities, preservation funds, living annuities and endowments to cater for the full range of your investment needs.

As a result, most advisers do use a LISP. But which one, and why? Here are some questions to ask your adviser about the platform he or she works with:

Why has your adviser chosen that particular platform to use? Is it the professionalism of their service or the range of their offering?

If you are looking at unit trust investments, what is the LISP's available range of funds? Most LISPs don't carry every available unit trust, for example. Is the fund you are interested in available on the LISP your adviser is using?

What other investment instruments such as share portfolios, ETFs or hedge funds are offered?

What other products are available on that platform, such as retirement annuities (RAs), endowments, preservation funds and living annuities?

What are the fees involved? There's no such thing as a free lunch, as the saying goes. LISPs charge a fee for their services, which will be additional to the fees you are paying your adviser and the fees you are paying the managers of the different underlying funds in which you have invested.

How functional and accessible is the platform? Will you be able to log-in to it yourself whenever you want, to look at your investment portfolio?

Are there any additional tools available? For example, can you access and print investment reports? Can you view fund prices for yourself?

There will be a few more considerations when your adviser uses a platform, including the financial stability of the platform and value for money when using that platform.

Keep in mind that by law, if you decide you want to stop using the services of your financial adviser, you can ask the LISP to remove him or her from your account and to stop making any advice fee payments. "But then also remember that you will be on your own, and it is not the LISP's duty to take care of your future needs or objectives - your future investment outcomes will be determined by your own decisions," Visser concludes.