Centralised Investment Propositions (CIPs)

Following on from my blog about Risk Targeted Funds: Risk Targeted Funds

The FSA published last year published guidance on centralised investment propositions which highlighted a number of points:

·         Client Segmentation – Good practice guides, also where firms are being taken over they expect you to review these clients

·         Robust systems and controls – To ensure that clients are not being defaulted into one specific fund or investment solution

·         Financial Incentives – FSA quote ‘firms should take appropriate steps to mitigate the risk of this conflict resulting in unsuitable outcomes for clients’

·         Due Diligence – Mainly to do with flexibility and choice to meet the clients needs of the systems that you are using

·         Portfolio Drift – Concerning the importance of portfolio reviews as part of the on-going service which has been agreed

·         File Checking and MI – Data available to ensure that client outcomes are suitable

It’s worth a read.

FG12/16: Assessing suitability: Replacement business and centralised investment propositions
Interesting debates here about this as well:
FSA outlines advice flaws in centralised investment clampdown

You may be wondering why there is a picture of the beef/horse makeup above. Someone said to me that that you should expect to know what you are buying and that it has exactly what it says on the tin. Is this different in an investment process and resulting solution? Are the ingredients you are using to build portfolios delivering what your processes say it will?

In my view a bog standard managed fund has now evolved from the four traditional asset classes to include a wider range of assets. So how do you find the time taken to select said assets within funds? How do you know what you are buying? I think the time it would take would be a mammoth (next to be found in a burger) task. Are you a fund manager or a financial planner? For your top end clients yes, the fees you receive would probably justify having a full investment process which is bespoke to that client, but for the majority of your clients I would suggest concentrating on financial planning with outsourcing the investments to specialists and so making your business more efficient and more profitable.

There are a number of solutions that can achieve what the FSA paper is asking – too many to go into on here – but here is a link to the one that I am most familar with. http://www.avivainvestors.co.uk/adviser/featured_funds/multi-asset-funds/index.htm

The evolution of platforms

WRAPs, Platforms, Suppermarkets? Should we be confused? No! In my view all this stuff is a website that has the means to transact and administer various types of tax wrapper (ISA, Bond Pension etc) and other forms of product (such as mortgages, protection and annuity) What do you need? I think that it should be simple, cost effecive and have the service to back it up.



There has been a raft of information over the past few years, moreso in the last few months, as I believe that this area will expand massively especially now that RDR has landed.

Below are some research systems available to help you to make an informed choice as to the different offerings out there. I think that all the offerings do all have something different over each other, so you would be wise to use a number of them to enable you to utilise these differences.

Resources available are linked below:
MoneyMarketing Platform Report - Lots of articles and reports
The Platforum - Weekly blog and industry influencer
The Lang Cat - Very good blogs and twitter feeds. Personally I rate Mark highly and always tells it straight
The Platforum Pricing Guide - Good overview of all the major players in the market
Aviva Due Diligence Document