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Advice and research – time is money

Investment research

As far as sourcing information on various investments, there are some good providers of information such as Defaqto, FE Analytics and Synaptics that can sort products quite quickly when you have learned how to use their systems. However, they are quite manipulable to produce the results that advisers want to see to suit their own Central Investment Proposition. Morningstar, FE Analytics and ARC also provide detailed investment fund information to enable comparison.

The research piece of the process is where the FCA and the advisers diverge in their stance. The FCA would like to see full research from an independent source to show a robust rationale for the choice of product and provider. Ideally, on an individual client basis to prove ultimate suitability of the solution the adviser has recommended for the client. Whilst this utopian ideal is possible, the time involved in going through an in-depth research process for each client would make an adviser quite inefficient and would make profitability difficult to achieve.

It should be remembered that all the providers have beautiful documents extolling their virtues over all others. Some of them also provide “due diligence” documents about their products. That is why the FCA is so keen that third-party research is undertaken.

There are also excellent providers of in depth comparison and review research reports, such as Hardman & Co, the Langcat, Threesixty, Defaqto, Fundscape, Platforum and other that produce reports from time to time. I have also dabbled in this field with regular platform research reports and my MPS report that detailed the MPS products of 65 providers over a 160+ page report.

And this is just about products that advisers are advising upon on a regular basis.

Some advisers like to use structured products it would appear that Structured Edge by Future Value Consultants is the most utilised research tool. As well as all the latest product research it has a searchable database, comparison tools, rankings, news and education.

Tax-efficient investments

Some advisers also work with higher net worth clients and use the tax efficiency of Enterprise Investment Schemes (EIS), Seed EIS, Venture Capital Trusts (VCT) as additional investments and Business Relief products for inheritance tax planning. Research can be provided by some of the companies already named and probably more specialist information from MI Capital. Also, there are websites focussed on these product areas, such as Growth Invest and Kuber that provide comparison facilities.

The problem for advisers can be unfamiliarity with some of these more esoteric products or different platforms. They are starting from a point of minimal knowledge. Then, if they are not working regularly with certain products, they are almost starting from scratch each time they revisit the product or provider.

So, for convenience most advisers will opt for an online research provider. Something that can tick their compliance box as having undertaken independent research.

Doing the independent research can be a total time-thief so it is a difficult balance and possibly subject to the law of diminishing returns. It pays to bear in mind the crucial requirements such as:

  • How much information should the client receive?
  • How much information does the client actually want?
  • Are you in line with Treating Customers Fairly (TCF) regulations?

Ultimately, the client just wants the comfort of knowing that they have received expert advice to provide the solutions that they need to help them to achieve their own personal goals.

Tony Catt Compliance Consultant

07899 847338

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