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Mike Barrett from the lang cat joined us to discuss how to design, monitor and implement your own Centralised Investment Proposition within your business.
 
Find out more about the speakers and access a transcript and the slides below. 
 
Mike Barrett from the lang cat joined us to discuss how to design, monitor and implement your own Centralised Investment Proposition within your business.
 
Find out more about the speakers and access a transcript and the slides below. 
 

 

 

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  • Slides from the video

    Download the slides from the video PDF 2.13 MB
  • Transcript of the video

    Simon Taylor: Hello, good day and welcome to today's webinar - A guide to building a compliant Centralised Investment Proposition. My name is Simon Taylor, Head of Strategic Partnerships, and I will be your host and MC today. I'm joined by Anita Turland, Public Relations Manager at Investec Wealth & Investment, and Mike Barrett, Consulting Director at the lang cat.

    Good morning to you both. Firstly, a big thank you to those of you who have posted questions to our experts in preparation for today's webinar. For those of you that would like to do so during the session, please do make use of the chat box facility and we'll endeavour to answer as many of these as possible.

    You'll be pleased to know that there will be CPD certificates available to download from the platform at the end of today's session. And if there are any technical glitches or your screen freezes, please do click on the question mark icon at the bottom of your screen and you will get some assistance.

    Now on to the knotty subject of CIPs or Centralised Investment Propositions. First recognised by the FCA probably around about 2012 (in advance of the retail distribution review going live on the 31st of December) and first talked about by the FCA in Financial Guidance 16, which was all about assessing suitability with regards to replacement business.

    Now, at that point there were very few assets on platforms and they were very much still in their embryonic state, and flows and assets under management were not that material. Some 11 years later, as can be seen here, this has all changed.

    We've seen an explosion of assets under management on platforms. And looking at the latest data from Platforum, there was some £646 billion of assets on platforms. And as you can see from the dark blue line at the bottom there, you can see over recent years, there's been an increasing use of discretionary fund management solutions - in particular MPS. And market commentators are talking about this growing by some 25 percent per annum over the next four years.

    Now, the lang cat produced a very interesting "State of the Advisor Nation" report in January 2022. And this revealed some interesting information. The biggest pool of IFA assets on platforms were actually in advisory models, some 38 percent of the total assets. So in today's terms, that's something like £200 odd billion pounds.

    The second biggest pool was MPS, as described earlier, and then the third biggest pool was multi asset funds. Now at the time, the lang cat suggested that more and more advisors were beginning to find advisory models administratively cumbersome. Because of this, many were moving to MPS.

    So with this in mind, we asked the lang cat to look at how Consumer Duty would impact firms running advisory models. And today we're here to talk about the handy "Guide to Centralised Investment Propositions for advice firms which has been published by the lang cat. Good morning, Mike.

    Let's start with a nice easy question for you to break you in. Perhaps you can tell the audience who are the lang cat?

    Mike Barrett: Who are the lang cat? One commentator on the new model advisor comment board, I think, asked the same thing with slightly more course language! We're a business with just under 30 people within the business now.

    We do a mixture of communications, PR services, but also, the cart of what we do is built around advisor research platform, due diligence, software, et cetera, et cetera. So everything which we tend to talk about tends to be built on a platform of solid advisor research. So in the case of the slide we've got here, 600 or so individuals within the advice profession providing input to that study.

    I think that's what we would hope sets us apart from other agencies. It's not just making up numbers on the spot - we can prove the points that we tend to make.

    Anita Turland: Mike, we are nearly 200 days into Consumer Duty. What do you think are the emerging trends and themes?

    Mike Barrett: I think it feels like it's probably been quite a rapid introduction of Consumer Duty. And if I can cast my mind back to the summer when it was implemented in July last year, certainly there was the kind of question around how hard do the regulator actually enforce Consumer Duty, how seriously do they take it going forward? And you only have to look at some of the activities that happened on the first day of Consumer Duty going live - cracking down on banks paying poor interest rates to savings customers, but also some of the more recent activity in our world of advice and wealth management like cracking down on, for example, St. James's Place and some of their fee structures etc. - to see there's no doubt that the regulator is treating it seriously through their day to day activities with firms and through enforcement activities when that becomes necessary.

    But again, as part of our survey which we conduct with advisors, we asked them that very question - "What's Consumer Duty being like for you? What changes have you made?". And this was around about 500 firms in November last year, I think it was. And it tends to be, as you can see on the screen, the areas that advice firms and planning firms were focusing on was more around kind of the communications that they have with their clients.

    But also underpinning that, the way they've started to think about their advice propositions and their investment propositions - really focusing in on some of the target client requirements that exist on Consumer Duty to make sure that the segmentation that they probably had in place already through a Centralised Investment Proposition, for example, making sure that's aligned with not only the new rules, but I think a lot of firms saw it as a good chance to just refresh what they were doing and make sure that they're operating as effectively.

    I think more broadly on Consumer Duty, as I said, there's probably four key themes we've seen, but certainly this kind of seriousness of enforcement and activity from the FCA is not going away. Everything that comes out at the moment either points back directly to Consumer Duty, or you could quickly join the lines into that world.

    I don't think it's going to go away at all in the next few months for two reasons. Firstly, if you're a closed product provider, you've got a lot of work to do between now and the end of July. But also for all firms, there's the requirements to do your first annual report to evidence how you've been delivering outcomes for Consumer Duty. And I think in a lot of cases, that tends to be where the fun starts. But I think that the kind of areas which we're hearing from struggling a little bit more, which I think perhaps we'll talk about in a moment, are firstly the price and value requirements.

    So that's the hot topic that tends to be out there because it not only cuts to the heart of what firms are charging, and you can see over a third of firms made some changes to their charging structure as a result of Consumer Duty. Cuts to the heart of what they're charging, but you've then got the debate around how are you demonstrating that those fees are fair value? And we could talk for an hour about the topic of value and how dangerously subjective it is. Most firms are trying to do the right thing around that, but there's a bit of an absence, perhaps, of really useful sector specific good practice from the regulator in that respect.

    And then the other area is vulnerable customers. So again, looking down on our research here, a third have looked and evolved the way in which they're supporting vulnerable customers. And again, that cuts to the heart of what most good quality financial planners are doing to support clients through the good times, but really supporting them when those moments of truth, when those life events occur.

    And that's why, to sum it up, I think for the advice sector, they've been quite supportive of Consumer Duty because it's always been in the direction that they would like to take their businesses. And yes, there's a bit of "Oh it's the regulator telling us what to do and there's work to do", but the principles that sit behind Consumer Duty, the advice profession I think has got behind and tends to be doing pretty well on.

    Simon Taylor: So Mike let's just poke into these a little bit more. You mentioned vulnerable customers. There's obviously been a lot in the press around vulnerable customers, and it was something that was very much highlighted in that Consumer Duty report when it came out. What does How is Consumer Duty impacting how firms are having to treat vulnerable customers?

    Mike Barrett: Yeah, I think to a certain extent, it underpins everything. That's what a planning firm is going - when you work with a financial advisor, it's about protecting you against the potential bad times. And in some cases, the unavoidable bad times that's going to happen for individuals and within their family.

    And I know from all the research we've done into value, when you speak to consumers, that's the stuff which they actually value. It's that peace of mind. Knowing that when those events happen, your advisor is going to help you navigate those dark and stormy waters. To a certain extent, I think as I said, that's where advisors add their value.

    They've always recognised that it's been a process of continuous improvement around that. You're learning constantly through throughout your experiences, and you can never do too much in that respect, but I think specifically under Consumer Duty, it underpins pretty much everything that's there within Consumer Duty.

    So looking at the slides here (which I'm sure is a slide which people have seen a million times over the last year), focusing on the deliverables, the four outcomes around making sure that your products and services (whether that's you as an investment manager, whether that's an advice firm designing their own planning services); making sure that they're designed with a clear target market in mind; making sure that those services, whatever they are, represent fair value and they're priced appropriately; making sure that your customers understand what it is, this thing which they're about to invest in or this service they're about to buy; and then making sure that they're supported appropriately throughout the life cycle of the product.

    And as their needs evolve, you have the baseline scenario around that for your target clients, but then the vulnerability requirements kick in.

    So I know for a lot of advisors, quite possibly their largest client segment will be people approaching retirement. So thinking about it at an individual client level, how those needs might evolve as people transition into retirement and into later life. An obvious example might be that one in eight of us will unfortunately suffer from dementia. So as people are getting older, what does that mean for your advice services? What does that mean within the advice business. How do you identify that? And taking it back to Consumer Duty? What are the foreseeable harms that you need to avoid at that stage? So maybe things like making sure you've got access to wider family members, power of attorneys in place, those kinds of sensible things which advisors are doing. All Consumer Duty really is doing is just ringfencing that and emphasising the need to make sure that happens.

    So I think there's a lot of work. I think it's fair to say that the regulator has flagged that within the wealth management sector, the issue around consumer vulnerability is probably the area which they think the wealth management sector has the most to improve. And in particular, trying to avoid tick box approaches of blanket statements across your client segments like "All of my clients are vulnerable" or "None of my clients are vulnerable". That kind of blanket approach. It's about identifying individual needs and tailoring what it is you're doing to make sure that you deliver the good outcomes for retail customers, which sits at the top of that Consumer Duty chart.

    Simon Taylor: And you mentioned at the top of it 'price and value' and I think that's probably an area where lots of firms have been struggling with, particularly as you mentioned earlier it's quite intangible in some respects. Is it fair to say firms are still struggling with this?

    Mike Barrett: I think yes, there's kind of various degrees of struggling. I've not seen any evidence of firms, advice firms shying away from doing what needs to be done. And I also think for a lot of the smaller advice firms, it's far easier for them to do it because they're so close to the end customer that they serve, that, it's happening as part of the natural process of dealing with their clients. And yeah, they'll have closer, deeper relationships with their clients in that respect.

    But I think, as I said earlier, the issues are that firstly value is subjective. And it's subjective based on the circumstances and people will change throughout their day. The old joke that I drive my Dacia to the airport and then fly business class. So people are not price sensitive as an individual and it will be through the product or services, they make that choice themselves.

    But then when we do consumer research, which we did for another client last year, when you ask clients "Okay, what do you value from your advisor?", firstly, it was around about 90 percent net positive that those clients who are paying for advice do think that those fees that they're paying are value for money.

    So really positive endorsements of the advice sector at that level. But then the things which they value, as I said, earlier, they're less tangible. It's not investment performance or saving 10 bits on a platform fee stuff, which is easily measurable. It's that peace of mind. It's that reassurance. It's that, you've enabled me to change my lifestyle and start to transition into retirement. And that's the bit which you take it back to Consumer Duty. And there's a larger part about Consumer Duty. And particularly going into your annual report, for example, about measuring and evidencing that type of stuff.

    And that's the bit which I think the advice firms we speak with want to do. They want to do it well because they want to evidence to everyone, not least the compliance people, that they're delivering good value, fair value, good outcomes to their clients. But yeah, they could just do it with a little bit of help, I think, from the regulator, to look at sector-specific examples in the advice space around what does good and poor practice look like in that space.

    Anita Turland: So Mike, how do Consumer Duty regulations influence the design and operation of Centralised Investment Propositions for IFAs?

    Mike Barrett: Yeah, so we're starting to jump in towards the detail that's contained within the paper that we've worked on with Investec. And I think the thing which kind of struck me as we went through all of this is firstly, as Simon said, CIPs have been around for a long time, over a decade. But when we started really looking at this from an advisor use point of view, they've been really dominant for about the last six or seven years.

    So as part of our survey, we start off by asking firms, "Are you actually running a CIP?" And it tends to be nine out of 10 firms consistently are saying "Yes, we have a Centralised Investment Proposition in place". And frankly, some of those who say they don't, I'm pretty sure if we actually grilled them, then we'd probably discover that they're using the same platform and using the same investment solutions. They just don't want to admit it.

    It's very rare that anybody is building a bespoke portfolio for every single client that comes through the door. So the process that's always existed to build and maintain your CIP, all of our stuff now is underpinned by hard and fast rules within Consumer Duty. So if we had this conversation two or three years ago, we would have said, "Look, this is best practice to work through the process", which you can see on the screen here. But now from a design point of view, you are required to have a very clear target market for the service which you are manufacturing and your Centralised Investment Proposition. You do come under the manufacturer rules of Consumer Duty. So emphasising the word 'rules' on there as well is a key point.

    So that clear target market, who is this CIP designed for? What type of clients within my advice business am I going to use within my CIP? And good practice around that would be to have a negative target market as well. So who is or isn't it suitable for when we assume that you're not putting every single client to come through the door into your CIP? What does that actually look like?

    Loads of work around internal governance again across the board on Consumer Duty. But that will be about "how is the CIP implemented across the business, who's responsible for it, who's accountable for it who's monitoring it on a regular basis?". And in particular, for some slightly larger advice firms, where you might have a dedicated investment committee, investment managers being more hands on and responsible for the CIP. How do you make that link to other people within the business? So how do you make sure that the advisors who are actually giving the advice, the paraplanners, the administrators all know who the CIP is suitable for and how it's been designed to use?

    And then that kind of takes you into some of the other aspects around Consumer Duty, around the consumer understanding as well. As we saw in the research on the previous slide, that's an area which firms have been evolving. So whatever it is you're doing, making sure that your customers clearly understand this is the investment which we're putting you in as well.

    So Consumer Duty, really, as I said, it underpins everything that happens within a CIP, but it's been more about just raising the bar on the regulatory expectations, the types of things that most of us were doing already, it was more about just evolving what you're doing, rather than having to rip it up and start again last July.

    Simon Taylor: Yeah, the thing that immediately strikes me on the back of that Mike is that there's a lot involved in what you've just described there and maybe some of the larger advice practices and firms and maybe indeed some of the networks, have got the resources to pull together everything that you've described in that sort of process there. But as I mentioned at the beginning, and I think this was from your own report back in 2022, there's something like £250 billion being run on an advisory basis out there in the UK at the moment. Maybe it's come down a little bit. Maybe it's gone up a little bit. I don't know. IFA businesses are small, and I guess the question is, "What do you think the complexities are for IFA running advisory models these days on the back of what you've just described?"

    Mike Barrett: Yeah, I think it's something we explore in a little bit more detail in the paper. There's a useful checklist to go through the stages which a firm will need to operate.

    I tend to take a little bit of a step back first around this and all of the things you talk about. We know that most firms are running a CIP. We know that within those firms, the majority of your clients will be going through said CIP. So this thing you've just created is so important to the outcomes that the firm is generating for itself and more importantly for the end client. You need to spend time to make sure that it's operating as effectively as possible, and that's every definition of effectively that you might want to throw at it.

    So we know on the operational side, the research which we do with firms shows that it becomes harder and harder to run advisory portfolios as time goes on. Your advisory portfolios, if that's the way you're running things, tend to become a victim of their own success. So you end up with multiple versions of the same model portfolio because of how you've got to collect client instructions on an advisory basis. And yeah, that just becomes harder and harder to manage, riskier and riskier to manage as well as time goes on. There are no economies of scale on that bad side of things.

    But then we also know, on the investment expertise side as well and foreseeable harms, it's become quite difficult to navigate investment markets this decade for a number of reasons, and you've got other kinds of things coming down the track in terms of some of the sustainable disclosure requirements, for example, which will amplify the need for kind of specialisms on the investment side as well.

    And yeah, Consumer Duty foreseeable harms are "is a typical advice from really able to access the level of resources and investment expertise that a large, experienced investment manager might be able to bring to the table?" The answer tends to be for some firms, they feel that yes, they can run their own model portfolios, but like I said, it's so important to what that firm is doing that the more time you spend to make sure that operationally it's really slick hot and you've got adequate systems and controls around it to really monitor what's going on.

    That's where I think firms need to invest internally on what they're doing. But there's a lot to be doing and you can see on the checklist there kind of everything from documentation, making sure you are doing what the regulator requires around it, but the operational side, the training and competency side, all of that stuff around ongoing monitoring. That tends to be where the kind of the resource suck goes. So where the efficiencies start to creep through us as firms get larger and larger.

    Anita Turland: You may have touched on this already, Mike, but how does Consumer Duty impact the selection and monitoring of investment products within CIPs for IFAs?

    Mike Barrett: Yeah, this is a trend. So reflecting back to the slide, which Simon started with, what about half an hour or so ago, looking at our 2023 research - this is the 2024 version of that research, which we published a couple of weeks ago. And any advisor who's part of our advisor panel gets all of this research free as a result of completing the surveys. If you did complete the survey and you haven't got in your inbox already, then please hassle one of my colleagues and they'll get back to you.

    But what the research has shown is that for the first time of completing this study, DFM model portfolios are now the dominant destination for flows through an advisor CIP model. In all of the six waves, which we've done up to this particular point, it's always been advisory model portfolios which were the dominant flow. And you can see they're still clinging on in second place. But what I think Consumer Duty has done is it's forced firms to just reassess what it is they're doing.

    It's not an overnight change for advisers that they did flip over on July the 31st from one model to another. But as I said, it forced firms just to reassess that. Is this the best way to be delivering the best outcomes to our clients? And that's that nagging itch, which we talked about a moment ago around. It gets incrementally harder and harder, kind of a death by a thousand cuts, if you're running your own portfolios.

    We're just starting to see that direction of travel playing out, the direction of travel, but as an NPS provider you would be no doubt pretty happy to see. But I think also the NPS market has just got a lot more competitive over the last three or four years as well. It's now almost to the point of saturated by really good quality, experienced investment managers with masses of resources and expertise and well-known brands etc. And the cost of investing into an NPS, particularly into a passive solution has probably gone down to something approaching single basis point figures as well.

    So on the supply side, the markets involved have become a lot more compelling, but that ultimately is meeting the demand which we've seen coming through over the last four or five years through this research where firms have just started to gravitate away from doing their own thing and are focusing on their core strength of financial planning and being face-to-face with their clients.

    Simon Taylor: And just picking up on that that point Mike, we've done some research recently, which talks to the huge opportunity for financial advisors out there in the market. There are more and more clients that will be moving towards retirement, more and more clients looking for advice and, there aren't enough IFAs out there in the marketplace.

    So with that in mind, what do you think the outlook is like for our IFAs who are outsourcing their CIPs and do you see discretionary fund managers adoption being an ever-increasing part of this?

    Mike Barrett: Yeah, I think ultimately it comes down to the types of conversations that advisors are having with their clients and in particular, if you have been running your own advisory models, how investment-focused have those conversations been in the past?

    I know there are some firms where that tends to be a decent whack of the conversation in sitting down and reviewing your portfolio and seeing what's going on and talking about the markets, and for some firms that works well and for some clients it works well.

    But when we've done consumer research at a broad level on this - so a nationally representative sample of consumers who are paying for financial advice - those types of investment focused conversations are important, but they're not the most important thing going across the board. It is, as I said earlier, it's about reassurance, financial planning, am I protected, have I got enough money, can I afford to retire, can I afford to go down to four days a week?

    That's the value which customers, clients get from those conversations. That's the value which they ascribe to, for the advisor fees. That's the value which you will be able to evidence that you are delivering to your clients, which is obviously a hot topic at the moment across the industry.

    So I think the question is for a lot of financial planning firms, they're in that world already and maybe that's in their DNA, that's what they do, and it's all fairly natural for them. There's maybe the question around transitioning some of those firms who are a little bit more investment-led into that kind of more financial planning-led conversation. And some firms don't want to do that. Other advisors won't, as I said, there's no automatic right or wrong around this. If you're confident and comfortable doing that and you're delivering great outcomes and you're meeting all the requirements that are there, then great, crack on.

    But I think that if you are going to move from one world to another, then I think that's the area the investment managers can probably work out how they work side-by-side and sit behind the scenes, let the advisor do what they want to do and what they're good at and let the investment managers do what they're good at.

    Simon Taylor: I know Anita's got another question, but I just want to remind the audience that there's an opportunity for you to ask questions as well to Mike through the through the chat. I can see that we've got half a dozen already, but if there are any more to be asked, please do make use of that facility. Anita, I think you've got a question to ask.

    Anita Turland: Mike, this might be putting you on the spot a bit, but we're expecting the results of the FCA's thematic review of retirement advice. How do you actually see this playing out?

    Mike Barrett: We held our annual conference, or at least our London version of our annual conference last month and had the FCA as one of our guest speakers. And they confirmed then that this review is coming out before the end of Q1. So presumably in the next two or two or three weeks. I think firstly, you have to caution yourself a little bit around this. It's pretty early stages in terms of the regulatory life cycle for this work.

    So there was an admittedly very hefty survey, which went out to a couple of thousand firms last summer. And a slightly less hefty survey went out in November, I think last year as well. But that's kind of data gathering. Really, I think what will happen is that they'll use that data to identify areas of potential poor practice. And as I said earlier, hopefully share some examples of good practice.

    I think it's a little bit dangerous to jump in and focus on certain areas that might come out as potential poor practice, just because it was about an 80 page question survey. So there's questions around investment approach and ongoing fees and use of platforms etc. The scope of it's really quite broad.

    But I think notwithstanding all of those caveats, I think if there's a word search I'll be looking for when it comes out, it will be the one around 'ongoing advice fees', just because that's been such a hot topic within the sector over the last few weeks when we saw what's happened to the largest wealth manager in the sector and the question of is there any contagion into the rest of the sector. I think this work gives them the ability to answer that question. So they will have a lot of data to show around ongoing services and what's happening in that particular space, and we'll be interested to see what their conclusions are.

    Simon Taylor: As you say, it was a tomb and probably ruined many IFA summer holidays or plans for summer holidays. I think there was a very tight deadline that they had to get the results back.

    Mike Barrett: Yeah, early July and you're doing Consumer Duty and you're about to go on holiday.

    Simon Taylor: Yeah, so I'm sure that was that wasn't very welcomed by many, but one word that I did pick up a lot in that was 'sustainability' and not in terms of, ES and G, but sustainability of income and proving or having some form of proof around that sustainability of income for clients.

    And I can understand why, because there's something like, 650,000 clients that have moved into drawdown post pension simplification. And I think Age Concern did a report recently, which talked about 90,000 clients have taken as much as eight percent per annum income off those portfolios. And so the FCA is clearly going to be worried about the level of income that's been drawn from portfolios and the degree to which it will be able to continue to support people in their dotage.

    I guess that's an area where we can expect to see something as well?

    Mike Barrett: Yes, I agree. I think, and again, it's another great example of why it's such a broad piece of work. So I'm not sure there'll be a huge amount of specific conclusions on that because they could write a whole paper around that and they could do a whole thing on ongoing fees, et cetera, et cetera.

    I would hope that when they look at the advice sector, you're finding a little bit more of a sensible approach. I can't imagine there's many planning firms concluding that eight percent is a sustainable withdrawal strategy for their clients. That feels to me much more of an issue around some of the D2C direct investments and you look at the work which they're doing around investment pathways and the DC market as well - that's where I think that work is needed.

    But I think ultimately this will all go back to Consumer Duty. I think that's the one thing you can be certain of, that they're not going to decide that the rules they implemented six months ago aren't fit for purpose and they're going to need to do a new set of rules off the back of that - they'll point back to the work which they've already done.

    They're not going to mark down their own homework publicly to that extent. Everything, if it isn't sustainable - target clients, foreseeable harms, all of that type of stuff - will come through and those will be the rules which they will use to beat the advice sector if they need to.

    Simon Taylor: And Mike, we're now turning to some of the questions coming in from the audience. And we've got a question here relating to the guide that that you've written, which I'm sure IFAs will find incredibly useful in terms of having everything that they need to adhere to in terms of building, designing, and maintaining a Centralised Investment Proposition.

    The question is, "do the findings extend to what is now called centralised retirement propositions, where clients have built solutions for accumulation, and they're now building solutions for decumulation. Does everything that you've talked through this morning stand for that and is it covered in your guide?"

    Mike Barrett: Yeah, it does. What we tend to find is that for the majority of firms, they're not running a completely separate CRP retirement proposition. What is constant between whatever stage, whether you're accumulating or decumulating, tends to be the investment solution that's underpinning the rest of the financial plan.

    And obviously what changes fundamentally, whether you're accumulating or transitioning into retirement (decumulating), are the other activities that happen elsewhere in the financial plan. So managing cash, getting some sort of sustainable income, getting some sort of guaranteed income, perhaps around all of that. As well as all of the other broader financial planning activities.

    But yeah, there tends to be an investment element, whatever life stage you're at, and not many firms are selecting different investment solutions for those life stages. It's more about the planning that changes around that.

    But again, ultimately, whatever you want to call it, whether it's a CIP, CRP, whatever that is, it doesn't really matter. It will be pegged back to the Consumer Duty rules. Do you have a clear target markets? Who is this thing suitable for? What type of outcomes are you trying to achieve and evidencing that those are both fair value and are the best possible outcomes.

    Simon Taylor: And this is a bit of a controversial question, but I'll ask it anyway. I think your 2022 report was quite clear - there is a lot of money being run on an advisory basis in the UK by IFA's through platforms. You've talked today and your guide talks to some of the challenges of running advisory models. Do you think the advisory basis of running portfolios is dead or is there still space for them out there in the market under that segmentation piece that you talked about? Is it perhaps the preserve of, the wealthier client that wants to be more in touch with their investments?

    Mike Barrett: I think it varies. I completely understand why as a provider of outsourced investment solutions, you would quite like that to be the case. But I think it comes down to the skill set which you need to have within your advice firm and skill set and desire. How do you want to spend your time of your working life?

    And almost this kind of a Venn diagram, if you like, that overlaps. You clearly have to have the financial planning skills, the financial advice skills and the interacting with the clients, but then I think if you're running your own advisory portfolios within the firm, you're overlaying that with firstly, the level of investment skills that are needed, the investment knowledge to construct portfolios, to select managers, whatever you want to do. And then I think crucially the operational side as well. So making sure that it is running as effectively as possible. You really know how to administer portfolios on different platforms in your back-office system, through your planning tools etc.

    And, yeah, as I said, those are three kind of very distinct skill sets. I know some firms who have those skill sets and that's what they want to do, and they're really good at doing it. And yeah, I don't think they'll ever make the leap to outsourcing to DFMs.

    But quite often, particularly if one of those pillars change, we've seen, for example those firms on our survey recently who talked about, "we used to do our own portfolios, but our investment manager is now retired", or "our head of operations is retired". So there's maybe internal drivers a little bit as well.

    But like I said, there's the assumption you're doing what the regulator requires you to do. There isn't necessarily a right or wrong way around all of this. But it's so important to what the firms are doing to be constantly challenging yourself to make sure that's the right decision. That's what I would encourage firms to be doing.

    Simon Taylor: Mike, thank you for your time today. That's been incredibly valuable and useful. And as I mentioned and, in the chat, down below, you can see the guide that Mike's been talking about is available for download. It's also available on the Investec website under the IFA Specialist Advice Centralised Investment Propositions tab. And of course, it's available from your Investec business development director.

    My thanks to Mike at the lang cat and his team for all the great work in pulling together and publishing this guide. As I said before, I think many IFA firms and their compliance officers will find it useful. A reference book with everything in one place, I think is something that everybody will appreciate for those of you who are thinking about discretionary fund management services, including managed portfolio services and how these might form part of your CIP or indeed centralised retirement proposition moving forward.

    Please reach out to your business development director, or indeed myself, and we'd be very pleased to support and help you.

    There's a lot of information available on the Investec website, including a guide on how we can help with a Centralised Investment Proposition. We're also very pleased to support and help IFAs who are running models and thinking about moving towards MPS, to critique these and talk about how a managed portfolio solution can help.

    I think one of the areas that Mike talked about is in terms of Consumer Duty and target markets and then producing all the literature around that. We've got a lot of material to support and help IFA's with clients and conversations around MPS and indeed, when they're up and running, a lot of information to support advisors to keep clients informed with what's going on within portfolios.

    Anita, Mike, it's been very good of you to join us today. Thank you very much for your time. Thank you for your participation. And thank you to the many IFAs who have joined us today. Thank you.

    Anita Turland: Before we go, Simon, a couple of people have asked for the slides.

    Simon Taylor: We can make sure we can get a copy of the slides across to you as well. Thank you very much, everybody. 

 

 

Speakers in this webinar

Mike Barrett

Mike Barrett
Consulting Director, the lang cat

Mike is consulting director, and sole-proprietor of the lang cat Isle of Wight office. A driver and survivor of platform mergers, migrations and RDR he held a number of senior roles at Skandia and Old Mutual Wealth. He is now working with platforms, advisers, banks and asset managers to help them create and communicate in a way that is a little less corporate and a little more human.

Simon Taylor

Simon Taylor
Head of Strategic Partnerships & Platforms

Simon is responsible for maintaining and developing key strategic partnerships for Investec Wealth & Investment (UK) in the UK Financial Adviser marketplace. His role involves expanding relationships with existing Investec Wealth & Investment (UK) clients and developing new partnerships with National adviser firms, Networks and Adviser Platforms. Simon has been involved in the UK Financial Services market for over thirty years.

Anita Turland

Anita Turland
Public Relations Manager (now retired)

Anita has decades of experience finding fascinating insights from within the UK's financial services industry. 

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