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Working on your business 
IFAs are subject to same principles as everyone else More ...
Fatbergs! 
IFA recycling More ...
The Stuff of Nightmares 
Reflections on the lesson from CP17/16 More ...
Short-Termism...again 
Follow-up to last week's blog More ...
How to lose your majority 
Election lessons for IFAs More ...
The Assessing Suitability Review 
Financial Crime + AML 
A strange interaction 
How 'thick' is your proposition? 
Quick-Start Your Proposition 
A reason to celebrate 
It's OK to be a capitalist 
The Case for Cashflow 
There's always a crash 
Somewhere, close to the brink 
The Persistent Elephant 
Mind the gap 
Merry Christmas 
The ease of negligence 
Brexit: we need entertaining! 
Red sky in the morning... 
Sustainable, or...? 
Advertising and Attention-Span 
Complexity + client understanding 
A world where nothing...quite...works 
Dreaming the dream 
Eve and the Apple
For goodness sake 
Too good to be true? 
Wake up to a new world 
Data in, data out 
Don't be like Yodel 
A little nostalgia is a good thing 
Welcome to my world 
Sorry to brag, but... 
Complaint-Management Models 
Intimations of mortality 
The wonderful world of regulatory permissions 
From alert to supervisory action 
Due-diligence, suitability and all that 
Regulation, the one-way street
The old ways persist
There is sweet irony here... 
'Wot's compliance ever done for us?' 
A man who made his mark 
Messy world planning 
Teabags and Data-Disconnect 
2016: Onwards and Upwards 
On 'Doing Network' 
Tis the season to be whinging 
Futile Forecasting Frustration 
On being deliberate 
Data Matters 
Over a lifetime 
Your money is safe 
What's going on at the FCA? 
The BT Engineer cometh 
Robot IFA, here we come? 
Rethinking the basics 
Independent...or what?
What you write matters 
Be careful out there! 
Crimes against information 
Realism not Cynicism 
A Question of Trust 
Choices, promises and client experience 
Where's Value? 
Just Say No 
Too bright to look at? 
Compliance + Subjectivity 
Fostering the critical mind 
The sidelining of the client 
There be Bear-Traps 
Threats to Sustainability 
2015, Looking Forwards
Merry Christmas! 
Regulation's working... 
Innovation and Self-Service 
The Challenge of Due Diligence 
The joy of Notes 
Re-Evaluating Rebalancing 
It's all joined-up 
Lights, cameras, action, EIS... 
Row over EU 'interim levy' 
Fences make uncomfortable seating
Adviser Mood Swings Need an Explanation
Choppy waters? 
 What's your number?
Freedom 
Independence...again
Is it a maze? 
The risk of risk 
Picking the winners 
All you need is love ...
CoCos...Pop! 
It's a State of Mind
Face to face with the FCA 
Surprised by excellence 
Afloat in the Sea of Ambiguity?
Independence +
Does A Fund's ACD really matter? 
The Future's Bright, the Future's Orange? 
2 + 2 = 4 (or does it?) 
What's smart about smart beta?
Even Marcus needs wellies 
PIMS and the place for products 
Ethical Professionals 
Trusted Adviser...or what? 
Never out of fashion 
Customer Service! 
Tulipomania! 
Adviser Charges - the FCA Thematic Review 
On Not Advising on Mortgages
Ennui about Annuities? 
Where there's a Will... 
Your Proposition 
Justifying our existence 
Getting there safely 
A Network perspective
How to look forwards
The point of promises
Auto-Enrolment Implications
Happy New Year
It's almost Christmas
Merry Christmas to All!
Behold...the new marketplace
What's your commute like?
The illusion of choice
The lust of the eyes
A legacy food nostalgia trip
A good read
A bit of fiscal responsibility
Risky business
Service, service + More Service
A salutary Tale
Sorry doesn't have to be the hardest word
RDR Charging - Media Reporting
Anticipating randomness
When Outreach is Underwhelming
Matching expectations
Uncertainty, planning, hedging
Who is being served?
Reasons to be grumpy
Adequate analysis
Client Reviews
Hey ho!

Due-diligence, suitability and all that 

The FCA published its Thematic Review (TR16/1) last month.  We had a vested interest in the results emanating from this initiative, as ValidPath were one of those intermediary firms that the FCA visited, in order to question us about processes, resources, disciplines and culture.

TR16/1 is a surprisingly brief paper, with only two pages summarising the FCA's findings.  This means that it is difficult to draw practical implications from it that are anything other than of a rather general nature.  However, this does not mean it is without value, as it may help to underscore the kinds of emphasis which have formed a core part of our guidance in recent years:

"We were disappointed to identify issues relating to platform research and due diligence, particularly having previously published our expectations..."
Based upon our own experience, ValidPath were not entirely sure whether or not the FCA actually understood the interaction between investment models and the selection of platform, as these two issues are frequently interdependent.  However, in broad terms, the FCA has a point: since your investment model is somewhat hypothetical until the point of delivery, IFAs must demonstrate acceptable due-diligence in respect of that delivery mechanism.  The "We just like using Transact" approach is certainly not acceptable in RDR World.
"Firms which demonstrated good practice had research and due diligence as a central function of the advice process"
We endorse this view without reservation.  When we encounter skimpy research, this is usually diagnostic of a low, casual view of financial outcomes for clients.  It should not be acceptable to any of us.  ValidPath provides Members with an excellent, whole-of-market research tool, and we expect to see it used fully and consistently.
"...inappropriate bias...conflicts of interest..."
The FCA deals with these two areas of weakness under section 2.3, and it may be wise to be just slightly skeptical about the criticisms.  Where they speak of "status quo bias", it is worth reflecting on how it is, in practice, that IFAs may find themselves in a groove when it comes to using particular providers (especially platforms).  It is, however, quite clear that the FCA does not think that "service" is an adequate justification for platform selection, when what is meant is the service to the IFA.  That is a perfectly valid criticism of intermediary practice.
"We saw one firm that...when it carried out the due diligence...selected criteria based on platform features that would make its existing platform come out as the preferred option, rather than carrying out an objective assessment."
We're very happy to confirm that this criticism would not have applied either to ValidPath, nor to the two Member Firms that FCA officials visited, but this does highlight one kind of practice that, historically, was quite prevalent within our industry. One of the reasons why ValidPath introduced DeFaqto Engage for our entire membership in 2014, was to supply our Members with unfettered access to a genuine research tool, rather than something that was crafted to 'compliancify' preferred choices with a veneer of something that had the appearance of due diligence.


Suitability and due-diligence are at the core of great financial-planning, and are essential to optimise the outcomes for clients.  ValidPath have consistently argued this point over many years, especially as the underpinning for genuinely independent advice.
 


Kevin Moss, 03/03/2016

Working on your business 
IFAs are subject to same principles as everyone else More ...
Fatbergs! 
IFA recycling More ...
The Stuff of Nightmares 
Reflections on the lesson from CP17/16 More ...
Short-Termism...again 
Follow-up to last week's blog More ...
How to lose your majority 
Election lessons for IFAs More ...
The Assessing Suitability Review 
There are lessons here More ...
Financial Crime + AML 
Flagging up the new guidance More ...
A strange interaction 
Surely, these are two entirely disparate and unrelated topics? More ...
How 'thick' is your proposition? 
Easter closure More ...
Quick-Start Your Proposition 
Speed is of the essence More ...
A reason to celebrate 
The first fifteen years More ...
It's OK to be a capitalist 
Like it or not, we are this thing More ...
The Case for Cashflow 
A quick reminder about CashCalc More ...
There's always a crash 
For this, you have insurance More ...
Somewhere, close to the brink 
We've been using OM's systems, and it's not been a happy experience More ...
The Persistent Elephant 
On the PII market More ...
Mind the gap 
An example of regulatory ambivalence which affects Advisers More ...
Merry Christmas 
Christmas message, 2016 More ...
The ease of negligence 
Lifetime cashflows, variable growth rates and market events More ...
Brexit: we need entertaining! 
Reflections on Article 50 More ...
Red sky in the morning... 
The FCA publishes interim findings from its asset management market study More ...
Sustainable, or...? 
Are we building something to last, or just paying the bills? More ...
Advertising and Attention-Span 
Thoughts prompted by marketing surveys More ...
Complexity + client understanding 
More and more information? Or better-quality advice? More ...
A world where nothing...quite...works 
Feedback after our DeFaqto Engage training workshop More ...
Dreaming the dream 
The differences between being awake, and being asleep More ...
Eve and the Apple
The lessons that Apple probably didn't seriously intend More ...
For goodness sake 
Enough of the doomsday scenarios, please More ...
Too good to be true? 
News this week regarding Film Partnerships More ...
Wake up to a new world 
The IFA's role in a Brexit world More ...
Data in, data out 
Some clarity about Clarity's clarity More ...
Don't be like Yodel 
Lessons to be learned about your service proposition? More ...
A little nostalgia is a good thing 
More thoughts on longevity and the advisory process More ...
Welcome to my world 
The RMAR is the new incarnation of the hamster-wheel, but less fun More ...
Sorry to brag, but... 
A recent member visit prompts a few thoughts More ...
Complaint-Management Models 
How other people do it More ...
Intimations of mortality 
Victoria Wood and the critical value of 'What If?' planning More ...
The wonderful world of regulatory permissions 
It's P2P time! More ...
From alert to supervisory action 
The FCA's supervisory actions in relation to pension switches and transfers More ...
Regulation, the one-way street
A reflection on recent experiences More ...
The old ways persist
We are surprised by the discovery that commission overrides still exist More ...
There is sweet irony here... 
The demise of Rebus More ...
'Wot's compliance ever done for us?' 
A rumination on the relationship between compliance and professionalism More ...
A man who made his mark 
We are grateful for the memory of Richard Mein More ...
Messy world planning 
Advice when the numbers don't necessarily add up More ...
Teabags and Data-Disconnect 
Lessons learned from the humble teabag More ...
2016: Onwards and Upwards 
The perfect antidotes to anxiety More ...
On 'Doing Network' 
A reflection on ethos and future development More ...
Tis the season to be whinging 
Further reflections on the complaint culture More ...
Futile Forecasting Frustration 
Reflections on the folly of market-timing More ...
On being deliberate 
The benefits of lifetime cashflow planning More ...
Data Matters 
A piece inspired by the FCA's Gabriel system More ...
Over a lifetime 
Some of those old products did actually deliver More ...
Your money is safe 
Kevin is trouble-shooting at the bank More ...
What's going on at the FCA? 
Reflections on our recent experiences with approvals More ...
The BT Engineer cometh 
Observations based upon the inevitable disappointments of the Real World More ...
Robot IFA, here we come? 
What is it that you, uniquely, do for your clients? More ...
Rethinking the basics 
There's a website revamp on the way... More ...
Independent...or what?
Reflections on a telephone conversation More ...
What you write matters 
A few thoughts on the crafting of client documentation More ...
Be careful out there! 
The world IFAs operate in is a challenging one. This is a quick reminder of a useful tool. More ...
Crimes against information 
The myth of objectivity, and what we can do about it More ...
Realism not Cynicism 
A more positive view of regulation? More ...
A Question of Trust 
Thoughts about recruitment and the qualities of human beings More ...
Choices, promises and client experience 
Learning some lessons from party manifestos More ...
Where's Value? 
For when the beach is crowded More ...
Just Say No 
Reflecting on the recent PFS guidance More ...
Too bright to look at? 
The eclipse of DB schemes and the flourishing of risk More ...
Compliance + Subjectivity 
Compliance and financial promotions More ...
Fostering the critical mind 
Inquisitive methodologies and the pensions reforms More ...
The sidelining of the client 
Legacy products, and the insidious decay of our clients' financial capability More ...
There be Bear-Traps 
Some reflections on the pension reforms More ...
Threats to Sustainability 
Reflections on the dynamics of the PII marketplace More ...
2015, Looking Forwards
A positive framework for progress More ...
Merry Christmas! 
The last Blog of 2014 More ...
Regulation's working... 
Recent experiences don't exactly instil confidence... More ...
Innovation and Self-Service 
On anticipating the implications of technical innovation More ...
The Challenge of Due Diligence 
Reflections after ValidPath's CPD Event on BPR solutions More ...
The joy of Notes 
How and why we use information, and how we go about recording it are very important issues. More ...
Re-Evaluating Rebalancing 
Rebalancing methodologies matter More ...
It's all joined-up 
A few thoughts about the use of data-systems More ...
Lights, cameras, action, EIS... 
A great new film, and some thoughts on tax-efficiency More ...
Row over EU 'interim levy' 
Would David Cameron be happy with FSCS Interim Levies? More ...
Fences make uncomfortable seating
It's clearer than ever : you need to decide whether you will engage with AutoEnrolment. Or not. More ...
Adviser Mood Swings Need an Explanation
With a new investigation into due diligence, advisers would do well to have a clear explanation for differences in their attitude to investment solutions More ...
Choppy waters? 
Here it comes... More ...
 What's your number?
The importance and relevance of Management Information cannot be over-stated ... More ...
Freedom 
Yet more thoughts about independence More ...
Independence...again
Further thoughts on the independence conundrum More ...
Is it a maze? 
A few thoughts about ethics More ...
The risk of risk 
How many sources of risk does the IFA need to factor into his/her consideration? More ...
Picking the winners 
A comparison of 2013 and 2014 fund due-diligences is revealing More ...
All you need is love ...
Gill contemplates whether her chocolate habit has lessons for financial planning ... More ...
CoCos...Pop! 
A pre-emptive product-ban from the FCA. More ...
It's a State of Mind
Simple is not the same as easy, as Gill if going to find out next Friday. More ...
Face to face with the FCA 
Follow-on thoughts after our recent review More ...
Surprised by excellence 
A review meeting surpasses all expectations More ...
Afloat in the Sea of Ambiguity?
A new FCA Consultation is on its way! More ...
Independence +
Introducing our new Network-wide DeFaqto provision More ...
Does A Fund's ACD really matter? 
Should advisers avoid fund managers who are still using Capita as their Authorised Corporate Directors? More ...
The Future's Bright, the Future's Orange? 
Are financial planners designing propositions to suit a changing world, and client profile, or are we assuming (wrongly) that the future will be a clone of the past? More ...
2 + 2 = 4 (or does it?) 
Not everything in life is black and white, so advisers should address complexity in their advice too ... More ...
What's smart about smart beta?
Vanguard's Symposium gets Gill thinking More ...
Even Marcus needs wellies 
Advance planning saves the day, every time More ...
PIMS and the place for products 
It's hard work, but someone has to do it! More ...
Ethical Professionals 
On being different, but also proving it More ...
Trusted Adviser...or what? 
The key factor in moulding client relationships More ...
Never out of fashion 
Announcing Parmenion's new SIPP wrapper More ...
Customer Service! 
A reminder of the value to everyone of delivering a great service More ...
Tulipomania! 
How relevant are historic events to current market practices? More ...
Adviser Charges - the FCA Thematic Review 
The FCA's Thematic Review highlights a problem that really shouldn't need fixing More ...
On Not Advising on Mortgages
Thinking about the bigger picture More ...
Ennui about Annuities? 
Gill Cardy, writing from France... More ...
Where there's a Will... 
Highlighting the importance of Will-Planning, and flagging up a new service More ...
Your Proposition 
On why defining your proposition is so important More ...
Justifying our existence 
Reflections on the latest engagement with CMCs More ...
Getting there safely 
Another consideration of risk-management More ...
A Network perspective
Reflections on the network model, from both sides More ...
How to look forwards
One needs a clear view of the way ahead... More ...
The point of promises
Reflections on the boiler-system from hell More ...
Auto-Enrolment Implications
A few practical thoughts for IFAs More ...
Happy New Year
The virtue of setting realistic goals More ...
It's almost Christmas
Closing thoughts and thanks for 2013 More ...
Merry Christmas to All!
The penultimate blog of 2013, highlighting Gill Cardy's arrival More ...
Behold...the new marketplace
So where did all the independent firms go? More ...
What's your commute like?
Risks in the advice process More ...
The illusion of choice
Independence or what? More ...
The lust of the eyes
Why we only want the wrong stuff... More ...
A legacy food nostalgia trip
Bear with me here...there is a connection. More ...
A good read
A review of John Bogle's book, 'The Clash of the Cultures' More ...
A bit of fiscal responsibility
How to encourage decent retirement provision More ...
Risky business
Lessons learned from the documentation More ...
Service, service + More Service
Lessons from an Italian restaurant More ...
A salutary Tale
Before you arrange an annuity More ...
Sorry doesn't have to be the hardest word
One way of resolving our mistakes, and avoiding complaints More ...
RDR Charging - Media Reporting
Reflections on a Daily Telegraph feature More ...
Anticipating randomness
Observations from real life are relevant to financial planning More ...
When Outreach is Underwhelming
Reflections following a FOS Roadshow More ...
Matching expectations
Aside from the marketing, what's really substantive about our advisory proposition? More ...
Uncertainty, planning, hedging
How, exactly, do we enable our clients? More ...
Who is being served?
Recent experiences with customer service present some useful lessons More ...
Reasons to be grumpy
So there are good reasons, after all... More ...
Adequate analysis
A cost-effective investment analytics solution for IFAs More ...
Client Reviews
A quick highlight on this value-added area of your client service proposition More ...
Hey ho!
It's all across the news, so prepare yourself for the onslaught! More ...