Evidence your research
Firms need to keep records of their research, particularly if they have opted for a Centralised Investment Proposition (CIP). Evidence of this research needs to be maintained in order to prove independence of advice. It is normal practice for this research to be undertaken once or twice per year. How is independence of this research provable? Most providers can produce literature to provide due diligence for advice firms. Some providers even commission reports from researchers to provide third-party input to confirm their excellence.
I have produced several editions of my platform research, using data from the platforms as well as comparison sites and literature to provide some kind of meaningful comparison of platforms available at a given time. Make sure you find out what is available and, in a timely fashion, integrate that research into your due diligence processes to make the whole thing more efficient and effective.
Help for your MPS decisions
Last year, I was asked to undertake some research into Managed Portfolio Services for one of my client firms. The firm wanted to use OMW WealthSelect but wanted to have research to prove that the market had been checked before proceeding with OMW.
I looked at various reports that had been commissioned by providers, including WealthSelect, but want to go wider. The whole project mushroomed into a document with information from 65 providers that ran to over 160 pages. Job done!
I am now renewing my research and the report will be distributed by IFA Magazine during September 2021.
Breaking news …
More interesting, I have also been asked by IFA Magazine to produce a report on Environmental, Social and Governance (ESG) Investment, more correctly know as Sustainable Investment. There are many column inches on a daily basis about ESG investment strategies. And the thought of producing more might not be welcomed by some people.
However, in the interests of providing education to advisers and paraplanners about an area of advice that is being mandated by the FCA, my report will be to provide sufficient information in an understandable format to enable them to become confident about speaking with clients about matters relating to sustainable investment.
The key messages which I expect the document to usefully cover should be:
- How to discuss with clients what values they wish to see reflected in their investments
- How to then take the outcomes of this conversation and find funds that match these values
- Sources of information on funds and their ESG characteristics – questions to ask fund managers etc.
- How to find out more
- How to assure yourself that the funds are doing what they say they will do
- Divestment vs stewardship – plus how to get assurances that the stewardship is real and impactful and driving companies to transition
- Legal and regulatory duties – green taxonomy, FCA principles for describing ESG funds, new regs for IFAs to ask clients about ESG
- What the wider framework is – UK legislation to be net zero by 2050 (78% reduced emissions by 2035), new remit of BoE and FCA to progress net zero
- Beyond net zero, other ESG characteristics eg ‘E’ covers deforestation, biodiversity, soil health, water pollution, ‘S’ covers Just Transition, modern day slavery/forced labour, diversity and inclusion, etc
The report will start with a glossary as there are so many words, phrases and acronyms used in this area. It will then move into the investment spectrum and then onto the background explanations to hopefully provide advisers and paraplanners with everything they need to know about sustainable investment but were afraid to ask.
Like any good prophet, I speak of the report that is to come.
Tony Catt
Compliance Consultant
TC Compliance Services
07899 847338
