It’s time to revisit the Managed Portfolio Services Research space for the IFA Magazine Annual Report 2021. Compliance Consultant Tony Catt takes a look back to the publication of his first MPS Report for IFA Magazine and reflects on its success in filling a glaring gap in MPS Research.
The MPS Research report project mushroomed from an initial request from one of my client IFA firms. They asked me to undertake due diligence because they wanted to use a particular provider and needed to take a whole of market view to due diligence. Three months later, I had a document running to 160 pages involving more than 60 MPS investment managers.
My own experience over this challenging past year is that my report was used by my client firms to look at a wider range of fund managers. This has seen them straying away somewhat from the “safe” well-known names to use more specialist fund managers in line with their own investment beliefs and ethics.
Last year’s MPS report involved consideration of MiFID and PROD rules and the use of Centralised Investment and Retirement Propositions. There was an outline of agents as clients and reliance on others and when I raised this issue, I was blissfully unaware of how emotive this issue is for fund managers and platforms.
The VAT question
The report also covered VAT and MPS. Tatton Investment Managers has recently made an announcement that it had agreed that its MPS should be exempt from VAT. This revolved around MPS considered as a service (Subject to VAT) or a product (exempt). Digging deeper I was advised that Standard Life and Sparrows Capital and Cazenove had never actually charged VAT on their offerings in this arena. It is clear that looking at the press over the past year, other fund managers have now followed suit. The exemption from VAT enables the fund manager to work at a lower charging base which has to be a good thing.
The importance of ESG
The report also included a brief discussion of Environmental, Social and Governance (ESG) based investments which have become one of the most topical areas since its’ publication and many pages have been given over to it in IFA Magazine. Unsurprisingly, most fund managers have been keen to give evidence of their credentials in this respect. I have been commissioned by IFA Magazine to produce a detailed report on ESG investment and this research is underway. This has already proved to be fascinating as the first conclusion I have drawn is that I have still got lots to learn about ESG Investment and the relationship with the more traditional Socially Responsible Investments (SRI).
ESG is about a process rather than a fund and it is a whole culture of itself of how a firm invests and the range of funds that should or should not be labelled ESG. The understanding should be that the investment house uses ESG principles through the investment process and therefore their suite of funds is ESG based. Any help that anyone is willing to give in my research on this important area would be gratefully received.
The MPS report also covered which platforms accommodate which fund managers. I have done several editions of my platform research and have just completed the most recent one in May. This report covers most of the platforms in the intermediary market. I also included some smaller platforms that were not in previous editions to make the research more complete. I have also put together a comparison of the charging structures of the MPS families and I received the most feedback on this table from fund managers keen to make sure that my figures were accurate.
Comparisons were also run through Defaqto and Synaptic which provided some interesting figures relating to service.
Digging into the detail
The main body of the report was dedicated to the individual pages for each fund manager. These were mostly provided by the fund managers themselves and were an opportunity for them to show why advisers should use their services. That being said, it took a while for some of the managers to realise that I was not going to edit their submissions except occasionally to make them fit onto pages and look pretty. Many of the fund managers provided wonderful pieces of work with interesting graphics charts and tables to give additional detail about their investment strategies. Rounded off with a useful glossary of terms the report ran to 158 pages when published.
So, a bit like the Forth Bridge, it is time to restart my research again. After a year of lockdowns and restrictions it is time to revisit the MPS space. I am looking for updated information from all those who provided their information to me last year, and those who subsequently expressed an interest in being included. I have been very pleased with the response from the fund managers and how it has been greeted by clients and many friends. So if you want to contribute to this year’s report please do get in touch with me.
TC Compliance Services