Are we really Independent??

SianDaviesCole

Hi all

There doesn't seem to be any definite guidance out there on how many product/service providers you need to consider when you are "independent" rather than restricted. Does anyone know of any guidance out there, or happy to share how many they consider in their research? 

arongunningham

I think you assess the whole of market as a company who produce a short-listed panel you work from on each case?

Jona

If you start from the point that the whole of the market is open to you then you are independent.

You might be cutting out large chunks of this with overarching beliefs - e.g. don't believe in a active investment mandate - but as long as they have been considered, documented and discounted you are still looking at the whole of the market.

This can (should!!?) be at firm level rather on a case by case basis. In the active v passive example given above as a investment policy document available to all and discussed with all clients.

Is how I see it......

Jona

For providers etc and in creating a "panel" (for want of a better word) use software such as Defaqto to run regular (you decide on the frequency) market reviews.

For instance.  Platforms.  For a platform we need it to do X, Y and Z for the client at a cost of no more than £W.  This will give you a manageable shortlist that you can then document internally why you chose the providers you do over the others on the shortlist.

SianDaviesCole

thanks @Jona & @arongunningham ;

We use threesixty to give us a shortlist of providers (for a SIPP for example) so I guess this would be similar to running a regular market review. My question is more a case of - there are 10 providers on that list, how many of them do I have to do research on before settling on one as our main SIPP provider? 

I agree this is at firm level rather than case by case and there will be exceptions where an alternative might be needed due to specific needs but this is more for the majority of cases. 

Jona

I think this depends on your client segmentation.

Would you put a £5M+ client into the same product as a £200K client?  If not why wouldn't you?

You then have a list of providers A, B, C for one client segment, D, E F for another client segment etc etc.

SianDaviesCole

thanks @Jona ; totally agree - we have gone through that process already thinking of segmentation by likely need based on net worth/ongoing service level. 

So for our top clients who pay us the most OAC per annum they are likely to be £1m+ portfolios. For them, we feel that bespoke DFM portfolios are most appropriate which means for their pension going for a full SIPP. Using threesixty - I get a list of about 8 providers. The question is - how many of those providers do I have to research before deciding on one or two providers? 

arongunningham

If you're 'using' threesixty, I assume you mean you're using them as a green-lit panel.

So you have the ability to use any of the 8 without doing any research.

You will just need to decide which is most appropriate for the client's needs.

Some DFMs are better for collectives, some are better for stocks and shares. Some are better for £1m+, some are better for less (etc etc).

In my experience, when it comes to DFMs the Adviser already know who he wants to use. Alternatively, you can narrow down to 3 and have a beauty parade - let the client decide who they connect with the most.

arongunningham

By the way, how did you get to 8 - was it from a list like this and seeing who is reviewed on 360?

https://www.investcentre.co.uk/investment-partners

SianDaviesCole

@arongunningham ;
"green-lit"?? not heard that before! The decisions we are looking to make are at a firm level to get a "house view" on the providers we want to use. At the moment it's only thinking about the provider of the wrapper rather than the DFM (that's next!!). I agree with beauty parades for DFM as they all have their own style, however the provider of the wrapper is much more open to our scrutiny as its more about their admin and processes especially as most wrappers offer the same features so its often down to service both on IFA and client side. 
Not having to research them was my thought as threesixty do that.
Its more how do we narrow down their list - they have a list of providers for Full SIPP and looking at it now - there are actually 13 in the list which then specifies the cost of each one and options available. 
I think in practical terms, I will save the spreadsheet they produce with this list on and detail on there the providers I have discounted and why. For example - it shows some providers as not offering full DFM or only offering a restricted panel where for the UHNW clients we would want unrestricted so that will be an easy way to discount. 

arongunningham

Sure, that's what I meant by green-lit.

If you're using threesixty's DFM list as your panel (rightly or wrongly) then you don't need to do any more research to narrow that list down. Your job is done for you.

In reality, threesixty will tell you this is a list of DFMs they have simply reviewed. They are not authorised (or green-lit!) in any way.

It's a good source of due diligence though, this could be coupled with a Defaqto report and www.suggestus.co.uk