The changes of the past 12 months mean the backdrop to FTAdviser’s Top 100 Financial Advisers list is altogether different this year. And the way in which we construct the rankings has changed, too.
The list continues to use data compiled using data from our research partner Matrix Solutions, an ISS Market Intelligence company, via the Financial Clarity service. That provides a snapshot of some of the very best advice companies working in the UK today.
But in uncertain times, we wanted to make sure our list recognises businesses’ efforts to improve professional standards and maintain public trust in their services. So this year, for the first time, our methodology rewards companies that are either chartered by the Chartered Insurance Institute or accredited by the Chartered Institute for Securities & Investment. Full details of all businesses that meet these criteria be found online in the bodies’ respective company directories.
While the weighting afforded to this metric is relatively low in absolute terms, it has had a notable impact on this year’s rankings. As larger businesses are typically less likely to be chartered at a company level, the observable effect is that the change has been of benefit to smaller businesses – partially offsetting the emphasis placed elsewhere on flows and assets under management.
Key Points
- AUM held on relevant platforms accounted for an average of 48 per cent of each adviser’s score.
- Net flows as a proportion of AUM accounted for an average of 23 per cent of each adviser’s score.
- Company age accounted for an average of 9 per cent of each adviser’s score.
- CF30s as a proportion of AUM accounted for an average of 8 per cent of each adviser’s score.
- Asset retention accounted for an average of 6 per cent of each adviser’s score.
- Estimated performance accounted for an average of 2 per cent of each adviser’s score.
- CII or CISI company-level accreditation accounted for an average of 4 per cent of each advisers’ score.
And while just one of the top three companies is either chartered or accredited, eight of the top 10 and 16 of the top 20 do have such a status.
Of course, to ensure the list remains a dynamic, relevant ranking of advisers’ businesses, there are many other factors that we continue to take into account.
We look at the growth rate of advisory businesses, AUM and asset retention, the number of years’ experience each business has managing assets in different economic and interest-rate environments, and how well qualified their individual advisers are.
In order to check how advisers are managing their clients’ investments, Matrix Solutions used data received directly via its Financial Clarity product from fund managers covering 90 per cent of the retail investment market, plus 16 of the nation’s biggest investment platforms. In most cases, that means advice companies’ own platforms are not included.
As a result, the Top 100 Financial Advisers list incorporates not a company’s stated level of AUM, but rather the amount held on those 16 investment platforms and with most of the nation’s biggest fund houses.
Displayed figures have been rounded to two significant figures and include assets in retail advisory investments and pensions, reported to Matrix Solutions via Financial Clarity. The likes of DFM assets are not included.
When it comes to CF30s, simply calculating the number of financial advisers at a company would do little other than benefit the larger businesses. So we have divided companies into quintiles, based on the number of CF30 designees as a proportion of overall AUM, and awarded points depending on which quintile a company sits in. CF30 figures include qualified staff who are actively advising customers, and are accurate as of the turn of the year.
Clients also want to know if the adviser they see today will help them through the financial ups and downs of tomorrow. With that in mind, the list also continues to rate businesses on their ability to keep clients in their ranks.
Experience counts too, especially when uncertainty is greater than usual.
The average Top 100 Financial Advisers company has been in business for 45 years. That, however, is a drop of 10 years when compared with the 2019 list.
One of the side effects of our new methodology is that a small change in an advice company’s data can produce a relatively large change in its placing in the list.
As a result, there has been more turnover than usual in the rankings this year – but we believe it also means the Top 100 is a more well-rounded gauge of some of the best businesses in the sector.
Dan Jones is editor-in-chief of FTAdviser
