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 – silver bullet, or not?
Paul Jay Compliance, Suitability DB Pension, FCA, MiFID, Pension, Pension Transfer, PI, transfer, Xplan
If you ask most advice firms which part of the advice process consumes the most time, most will reply: “Suitability Reports”. Based on the mammoth documents that some firms still produce, we can understand why. We do have some sympathy with firms though. On the one hand they’re told by the FCA that reports are […]