We have published articles previously about the issues around ‘Agent as Client’ (AAC) when using Discretionary Fund Management (DFM) solutions for clients.
One of the issues is that few firms, if any, have disclosure or client agreement documents that actually give firms authority to actually appoint a DFM or to do so on an agent as client basis.
Most of the time an adviser is acting in an advisory capacity. For example, in making a recommendation that the client invests in a DFM portfolio, where the DFM will take full responsibility for all suitability aspects then, from a regulatory perspective, the adviser is operating within their standard terms.
However, Agent as Client, the basis on which many platform based portfolios managed by DFMs operate, is different and authority from the client to do so is required.
There is a variation on the theme. Some DFMs agree to engage the end investor client as their retail client but are still relying on the adviser to have the authority from the client to appoint the DFM in the first place. So again the adviser needs to have this explicit authority from the client.
Suitability Reports: Who is Fred?
David Anderson Suitability complaints, Pension, PI, Update
There is an old joke about a man going to his dentist, picking up a magazine in the waiting room and reading that the Titanic had sunk. This reference to how out of date dentists’ reading material can be is unfortunately not merely a mildly amusing joke or restricted to dentists.