Powering Your Business – placing the adviser at the heart of the value chain

Financial Advisory

Emily Landless

Advisory investment servicesArtificial IntelligenceData ScienceEngagementExperienceFinancial AdvisoryManagement InformationRiskTrendsWinning Advisers

It shouldn’t come as a surprise that most of our delegates (71% in fact) use an in-house CIP approach for their investment portfolios; followed by 38% using a third party CIP approach, but maybe it is time to have a good look at all the options out there.


  1. Review of current adviser practices around allocating investment business. Recently commissioned market insight report by The Lang Cat on Centralised Investment Propositions (CIPs) and their construction on Platforms
  2. Deep dive into CIPs, what choices are there for advisers?
  3. What considerations should be taken into account before outsourcing to a third party?
  4. Introduction to Tatton Investment Management – what they do, services they offer, typical charging

Key issues and challenges:

  • Knowing what to do to create most value for clients, balancing that with also creating value in the adviser business. Concerns expressed around ever-changing technology and some Platforms have really struggled to provide a robust and reliable service. Expectation of ongoing corporate activity in the Platform arena and continued ‘re-platforming’
  • There are a multitude of CIPs and MM Funds available for those who prefer to outsource and then working out what Platforms would be compatible. Recent FCA challenge to advisers about who benefits from Platforms.  If it is the Adviser, should they pay the fee, not the client? 
  • Trust is an issue (still) between some advisers and DFM’s – particularly where DFMs are becoming more interested in developing their own advisory arm. The vast majority of clients still see the value of their relationship with their Adviser, not with the Fund Manager or DFM.  The impact of ‘Robo-advice’ is not yet known as existing clients seem to prefer face-to-face advice.  This of course could be a generational thing which could change dramatically in the not-to-distant future
  • Importance of advisers becoming familiar with options available to them and their clients, for example Tatton Investment Managers not known to some advisers hence events like this needed to raise profile and awareness.

Conclusions and solutions:

  • The Lang Cat figures show 84% of advisers are using a CIP, 29% of advised assets are managed in-house. 46% of advisers are outsourcing to a 3rd party DFM, representing 26% of assets – this figure is steadily increasing. Top 2 criteria when considering outsourcing is 1) Price and 2) Performance. There are 23 different platforms but only 11 tech solutions supporting them.  Amazingly the vast majority of assets (83%) sit on Platforms powered by Bravura, FNZ or GBST.  Some advisers believe that their business is valued because of their in-house investment solution and that this remains a distinguishing factor
  • Nearly all views were that Platforms were a benefit to the client. Even if this was largely because of ease of administration for the adviser firm, this led to an improved, more efficient and therefore more cost-effective service.  Should the FCA expect Platform fees to be paid for by the adviser, then surely that would simply be passed on to the client in any event.  There are effectively 3 choices – 1) Develop in-house CIP. This can be time intensive, heavy on regulation but ultimately has greatest degree of control. 2) Outsource to a Multi-Manager or use Multi-Asset Funds. Can be easier to administer but may be Platform conflicts and the cost and benefit may not be clear. 3) Outsource to DFM Model Portfolios. Adviser maintains custody and client relationship but can be more complex and adds an additional layer of costs.  Conclusion was that there was not a single ‘right’ answer – much would depend on the client and the adviser firm
  • Advisers are increasingly aware of the perceived threat from vertically integrated businesses and how the client relationship can be protected from platform or other providers who have their own advisers. Recent examples have exacerbated that concern – even a well-known DFM have been suspected of tapping up an adviser’s clients leading to that adviser gradually moving all of their assets away from that DFM.  Justine from Tatton asked the question – ‘How would advisers feel if Tatton developed their own Platform?’.  Most advisers perceived this negatively and with some suspicion about ulterior motives and loss of control.  Considerations before outsourcing – 1) Understanding the reason for outsourcing and what is important, 2) How much centralised control do you have and what tools do you use, 3) How structured is the advice process and how does the cost structure work, 4) What prejudices/preferences do you have on investment style, 5) How often and in what manner do you communicate investment matters to your client

Impartial reports are critical in an effort to keep up-to-date with market changes.  The market insight report from The Lang Cat was distributed by Tatton Investments. Tatton themselves are exclusively available to IFAs, there is no D2C or non-advised route to their funds.  They are the largest on-platform DFM with a 6-year track record and a two-time winner of the Moneyfacts award for Best DFM.  Some considerations when selecting the most appropriate DFM are 1) Price (plus VAT), 2) Investment process, 3) Risk profiling process, 4) Client ownership, 5) Fit with platform(s), 6) Service standards, reporting and Manager access, 7) Breadth of models available – including Ethical and Income, 8) Due diligence of corporate structure – is it publicly available.

Expert: Justine Randall - Tatton Investment Management

Facilitator: Richard Burrows - Independent Consulting