InvestmentsNov 10 2015

WMA liaising on due diligence questionnaire

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WMA liaising on due diligence questionnaire

The Wealth Management Association (WMA) and consultancy Diminimis are working to create a standardised due diligence questionnaire on discretionary fund management.

The questionnaire would be distributed among investment advisers looking to source a DFM to manage client investments. The work, being led by the consultancy with advice from the WMA, aims to streamline the current level of requests from advisers.

Building on the Good Practice Guide by the Personal Finance Society (PFS) in association with Diminimis, the questionnaire would look to implement an industry standard.

Work began in April 2015 between the consultancy and the WMA, and a new draft is being worked upon after feedback from the trade body.

Speaking at a Thesis Asset Management conference, David Gurr, founder of Diminimis, said the questionnaire would be built around what questions advisers should ask DFMs, and what good due diligence looks like.

“Some WMA members are spending a fortune answering a million questions from advisers in all shapes and forms. The feeling is the vast majority will end up in a file, not looked at and not used.”

“We are trying to move into standardisation to help everybody ask the right questions.”

“Because [discretionary management] is service-driven, we need to look at what is being offered on a service basis as a company,” he added.

Mr Gurr said there was a difference between due diligence for a service and a product. The complementary PFS guide highlighted the need for advisers to ask questions and understand the risks of using a DFM, allowing for “decisions to be made in a consistent manner”.

“The starting point has to be the criteria on what [advisers] are trying to achieve when working with DFMs. You have to take into account the dynamic nature,” he added.

The PFS guide was published in February 2015 in order to “to assist member firms of all sizes address a challenging topic in an efficient and client-centric manner”.