Talking PointOct 24 2018

How to make outsourcing work for you and your clients

  • To understand what is meant by 'outsourcing'.
  • To learn different ways of delegating investment decisions.
  • To understand how the agent-as-client process works.
  • To understand what is meant by 'outsourcing'.
  • To learn different ways of delegating investment decisions.
  • To understand how the agent-as-client process works.
Supported by
Schroders
pfs-logo
cisi-logo
CPD
Approx.30min
pfs-logo
cisi-logo
CPD
Approx.30min
Supported by
Schroders
twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Supported by
Schroders
pfs-logo
cisi-logo
CPD
Approx.30min
How to make outsourcing work for you and your clients

3) Under the Markets in Financial Instruments Directive II, which came into effect at the start of January this year, there is now an increased focus on client reporting and transparency. 

“We can see regulatory pressures are pushing people further down this route”, Mr Coop said, with advisers choosing more frequently to use a discretionary fund manager that can provide the asset allocation, portfolio construction and portfolio management and oversight of the funds, leaving the financial adviser free to focus on the client relationship and financial planning. 

“Rather than have to demonstrate [to the regulator] every individual investment decision, an adviser who outsources will just have to demonstrate one decision – the reason for choosing that particular provider”, he added. 

During the first panel session, David Gurr, founder of discretionary investment management analysis firm Diminimis, agreed: “The regulator is not interested in passing comment on determining best practice for advisers using third parties for investment solutions or products. 

“They provide the rules; it is up to the industry to interpret these as they wish and to go from there. They are not telling you how to do things. It is up to the practitioners to interpret the rules correctly and look after the client.”

Russell Facer, managing director of adviser support services provider ThreeSixty Services, agreed it was up to the adviser to focus on what is the best for the client.

He said: “The regulator wants firms to decide what is right for that client base but you have to document why you have gone down that route.”

According to James Rainbow, co-head of UK intermediary for Schroders, it is also important for advisers to work out how they are providing these services and how they are communicating to their clients.

He told advisers gathered at the event: “If there is any disjointed line-up, for example, in terms of reporting or the 10 per cent portfolio drop rule, and it is not you, the adviser, ringing the client but it is the client ringing you, then this is not reinforcing your relationship with clients.”

He also agreed there was “no outsourcing of responsibility” for the adviser – he or she is accountable to the client even if the investment management is being carried out by a DFM or a multi-asset manager through a platform.

Mifid II

Focusing on Mifid II in more detail, panellists, speakers and even delegates touched on the thorny issues being brought to the fore by the EU legislation. 

There are issues such as the10 per cent portfolio drop, which under Mifid II requires clients to be notified of such a reduction in the value of their portfolios. 

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