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Threesixty launches DFM due diligence service


Threesixty Services is setting up a discretionary fund manager due diligence service amid fears a number of DFMs are not compliant with regulatory requirements.

Threesixty will assess DFM’s processes in order to validate them for member firms’ use.

The service will give advisers a summary of DFMs following a Threesixty audit. The service will be free for Threesixty firms. DFMs will have to pay for audits, which will cost up to £10,000.

Advisers will receive confirmation that investment processes meet regulatory standards and a full review of firms’ supervision and monitoring processes.

Threesixty will also confirm the experience and qualifications of key individuals and ensure any promotional material truly reflects its service.

The support services provider is set to begin auditing DFMs in June, with information made available to advisers over the following two months.

Threesixty managing director Phil Young says: “There are concerns around whether some DFMs are actually carrying out the things they say they do in their marketing literature.

“We are seeking to offer advisers an independent perspective on individual DFMs to make their assessment easier and clearer.”

In February, the regulator warned advisers using DFMs run the risk of “systemic misselling” if their clients’ risk profiles are not correctly mapped against those of the outsourced investment solution.

Evolve Financial Planning director Jason Witcombe says: “It will definitely be worthwhile for advisers to get all of this information in one place from a trustworthy supplier such as Threesixty.”



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There are 9 comments at the moment, we would love to hear your opinion too.

  1. The problem with this is the cost for the DFM. Threesixty can’t be expected to do this audit for free, but DFMs have to make a call over who they decide to pay for this service. If they are already paying huge fees to a service like ARC, can they afford to pay further fees to Threesixty’s service and, no doubt, further players in this market?

  2. It won’t be for everyone, but we are rolling the service out as we already have firms contracted and we typically offer the service at a lower or similar cost to other third parties they are already paying for. We already have some small, regional DFMs on board which demonstrates it is good value for them. It’s not just for the big firms.

  3. Thus, by definition, the ‘service’ will be very limited and of little use to IFAs who genuinely wish to use good discretionary managers, be they large or small.
    It seems to me that this is another example of ‘big brother’ preying on the (unfounded) fears of IFAs over due diligence which is neither rocket science nor overly time consuming.
    Bigger fleas have little fleas upon their backs to bite’em, etc.

  4. There just isn’t any pleasing some people!

  5. Tell me about it, Bert. It was a service requested by our IFA clients, funnily enough.

  6. Sure, anything that doesn’t cost anything is nice to have!

  7. @ David Cowell – is that actually true?

  8. Surely the big news here is that Phil Young has a tie 😉

  9. Great idea Phil, would be useful if you offered his type of service to IFA’s to have their investment process independently audited.

    With more and more DM business being transacted on platforms it makes sense adviser ps do they due diligence on their investment partners of choice.

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