Investments  

New service aims to help advisers sort risk

Distribution Technology has launched a service designed to aid financial advisers in their selection process for suitable investment solutions.

Called Risk Target Managed, the new service is aimed to help advisers distinguish the risk in targeted fund solutions through its tool Dynamic Planner.

A new Dynamic Planner Risk Target Managed badge will be awarded to funds or portfolios under Dynamic Planner risk profiles 3-8 that fulfil a five-point criteria.

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The criteria include a requirement for a fund or portfolio’s to stay within the targeted level of volatility and offer suitably diversified exposure to at least six asset classes included within the respective Dynamic Planner strategic asset allocations.

Distribution Technology’s financial analytics team will provide an independent quarterly consultancy service to asset managers to help them ensure that expected volatility remains within the boundaries of the Dynamic Planner asset model.

The team will also review actual past performance to verify that the volatility journey relative to the respective asset model benchmark return remains consistent through tracking error analysis.

Should asset managers deviate from volatility targets, the firm said it would give asset managers a quarter’s grace period to re-align the portfolio – after which its RTM badge would be revoked and placed under review.

Chris Fleming, director of Financial Analytics at Distribution Technology, said: “There is growing interest from asset managers in designing outcome orientated solutions that can be used as the foundation of a centralised investment process by advisory firms.”

He added: “We believe the new service will become increasingly relevant as advisory firms develop more cost effective business models ahead of the Sunset clause deadline.”

Adviser view

Dominic Basilea, director at Aqua Wealth Management, based in Hertfordshire, said: “It is just another tool which is already present in the marketplace. It has been there for quite a long time now. Yes, this type of tool is important but it is completely dependant on how it is used.”