CEO proposes regulatory change to how advisers use model portfolios

Model portfolios should be reframed to allow financial advisers to carry out management in-house, a chief executive has proposed.

In a new opinion piece for ifa, Financial Simplicity head Stuart Holdsworth said there is a “golden opportunity” to reframe portfolios or set investment strategies as a service to clients, as opposed to “the friction of seeking to match one-size-fits-all” for a client’s profile.

Referencing the Financial Services Council’s (FSC) recent white paper – in which the peak body proposed a new framework that could reduce the cost of advice by almost 40 per cent – the CEO of the portfolio management technology provider said it should be enhanced to include professionally managed model portfolios or investment strategies, calling it “best interest in a contained service scope”.

“Advisers are ideally positioned to deliver this. They know their clients better than anyone because they have the advantage of meeting with them face-to-face and often helping with more pressing strategic and life planning activities,” Mr Holdsworth wrote.


“Unlike external product providers, this personalised connection enables them to have deep insight into their clients’ wants and needs, including how they prefer to receive information and be involved in the decision-making process. This is a key value-add for clients.”

In terms of regulation, Mr Holdsworth said this could allow advisers to make adjustments to client portfolios to reflect an agreed investment strategy without “explicit” client consent.

“So is it time to remove the layers of red tape associated with trying to match products to clients and use the opportunity the FSC has created to go even further? As an industry can we challenge our thinking about ways to simultaneously reduce the costs of advice, improve advice business efficiency and create solutions focussed on the individual client? Mr Holdsworth said.

“My sense is that reframing model portfolios or investment strategies as a component of client service and using them as a foundation to meet the needs of individual clients would be a practical and realistic way to achieve all three.”

Read the full opinion piece here.

CEO proposes regulatory change to how advisers use model portfolios
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Neil Griffiths

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.

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