Lawrence Cook is director of marketing and business development at Thesis Asset Management
DFM and advisers: questions to ask
Once you have selected which type of discretionary manager you want to work with, you then need to find out if you can devise practical working arrangements.
Some questions to ask include:
• Can the DFM deliver the investment service in a way that supports your existing business processes, such as back-office data feed to the adviser?
• Does it have model portfolios available on a wide range of wraps?
• Can it offer practical help with risk mapping from suitability to investment solution?
FCA’s view: CIPs
Many adviser firms post-RDR have changed their business model and offer a centralised investment proposition (CIP). This includes portfolio advice services, discretionary investment management and distributor-influenced funds.
However, in its guidance, the FCA notes: “We recognise there can be benefits to offering a CIP for both clients and firms. Clients can benefit from more structured and better researched investments and firms can benefit from efficiencies in the management of risks associated with investment selection. However, we have concerns that, in certain circumstances, a CIP may be unsuitable for a retail investor.”
Therefore, it states that a firm either selling or intending to sell CIPs should:
• Consider the needs and objectives of its target clients when designing or adopting a CIP;
• Ensure that it is not ‘shoehorning’ clients into the CIP;
• Establish a robust risk identification and control system to mitigate risks that might arise from the specific characteristics of its CIP.
