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Four in five advisers use centralised investment propositions

InvestmentNearly four in five advisers are placing clients’s funds in a centralised investment proposition, a new survey shows.

A survey of 141 advisers Equifax Touchstone shows 82 per cent used centralised investment processes, at a time when the FCA continues to keep a watchful eye over suitability requirements.

The survey also finds that the use of model portfolios usually varies with the size of a firm.

In firms with less than five advisers, 66 per cent of them will use model portfolios, while in firms with over 50 advisers, the percentage increases to 83 per cent.

Overall, 76 per cent of the advisers surveyed use model portfolios, with 70 per cent using them for more than a half of the investments they make.

Standard Life’s David Tiller: Why centralised processes are so important

Money Marketing has recently analysed the pros and cons for advisers of getting the permissions to invest in-house, finding that, for many, it is easier said than done.

However, commenting on thee survey, Equifax Touchstone director John Driscoll says there is an ongoing shift to “a more structured” investment process that is putting CIPs at the core of IFAs work.

He says: “This approach helps strike the right balance between risk and return, particularly important in a world of increased market volatility.

“The FCA is very focused on the quality of advice that investors receive, and stamping out unsuitable advice is a priority. Being able to demonstrate that investment risk is managed, monitored and maintained to the appropriate level for the client is an important part of this. With the rebalancing and documented investment process at the heart of investment advice, investors can access a more consistent approach to investment.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. And why is this?

    Perhaps it is because firms with several advisers wish to control their risks and costs and therefore assume that all clients will fit perfectly into their proposition rather than tailoring the proposition to suit the client.

    Perhaps it is because advisers are not really up to advising on investments and need an off the shelf proposition provided by the firms administrators or investment committee. This should make for some pretty dumb conversations when the adviser engages with the client.

  2. Or perhaps it could be that a firm/adviser has segmented their client bank and has identified that a fully researched CIP is suitable for that segment of clients.

    Perhaps the firm/adviser has identified that the strength is in the client relationship and by outsourcing the investment management rather than spending lots of time picking individual funds etc this will give them more time focussing on the clients longer term goals and plans.

    Nothing wrong with taking a structured approach as long as it carefully considered and has the client’s best interests as its main focus.

    • It would seem that you deal with a lot of twins, triplets and quads. I have never come across two clients who require exactly the same.

      And outsourcing – as has often been commented on this site – is a huge cost deficit. Patting the client on the head is no substitute for the nitty-gritty. Most clients have the same long term goals – a yacht and a villa in the South of France.

      • Always seems to be your way or the wrong way doesn’t it Harry!

        Each to their own I suppose and I wholeheartedly disagree that outsourcing is a cost deficit. If it frees up more time concentrating on the important things that the client values, rather than the ‘best and latest’ fund that you have found for the client then clients seem to value the service more.

        From my experience 99% of clients are not interested in what funds there are out, as long as the strategy matches their risk tolerance and capacity and meets their goals and expectations.

        It’s interesting to note that you have never come across 2 clients who require exactly the same, yet you then go on to say most clients have the same long term goals.

        As I said though, each to their own and as long as the clients interests are the focal point for decisions made then you can’t go far wrong.

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