FE has been supporting the financial advice sector for over 20 years. In the third edition of our in-depth research report of the financial advisory industry we look at how Advisers construct and review their investment propositions.
Risk has never been such a big issue for financial advisers. Not only do today’s financial advisers need to correctly assess clients’ attitude to risk and interpret it correctly to match it to suitable portfolios – they also need to become risk management experts ensuring their firm is run in a way that accords with the regulator’s requirements.
This report was commissioned with a view to helping better understand the ways in which the financial advice community construct their investment propositions and how they conduct due diligence on any third party tools or expertise that form part of them. It highlights both the growing professionalism of the industry and some significant inconsistencies which need to be better understood.
Our report gives further evidence that advisers increasingly understand where their core competences lie and where they do not. For many, that quite rightly means an increased reliance on outsourced solutions, be it for portfolio construction, assessment of attitude to risk or monitoring of performance. However, even if advisers choose to buy in expertise as part of their investment propositions, it shouldn't mean they can sidestep responsibility for understanding investment solutions and their complexities. By taking these third party tools and services at face value many advisers may also be running risks they are unaware of, in some cases adopting processes that make them responsible for risks they do not know they are on the hook for.
FE has published this report to highlight best practice and areas where advisers could make improvements to avoid exposing themselves and their firms to business risk and regulatory action.
This report comprises data from questionnaires completed by approx 150 advisers in the period (December 2017 to January 2018), as well as other market data from FE.