Responsible Investing | IFA 85 | February 2020 by Clifton Media Lab

For today’s discerning financial and investment professional

Responsible Investing The ESG roundtable debate in London

What might Brexit mean for financial services?

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ANALYSIS

REVIEWS

An adviser ’s guide to PI insurance

ISSUE 85

COMMENT

INSIGHT

11 YEARS. 1,083 PRODUCTS. 7.64% P.A. AVERAGE RETURNS. 0 LOSS OF CAPITAL. ISN’T DATA WONDERFUL? In these volatile times, isn’t it nice to see ﬁgures like these? Of course it is – as the 11,000 or so advisers who have recommended our products will attest. Find out more about what we offer at Investec for Advisers.

Past performance is not a guide to future performance. This communication is intended for financial advisers only. Performance figures correct as at 30/09/2019 relate to Investec Structured Products, which is a trading name of Investec Bank plc. Investec Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. It is a member of the London Stock Exchange registered under Financial Services Register reference 172330. Investec Bank plc is a limited company registered in England and Wales at Companies House. Our registered office is 30 Gresham Street, London EC2V 7QP and our registered number is 00489604. Our VAT number is 480912639.

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CONTE NTS

CONTRIBUTORS

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Ed's Welcome

8 Brian Tora An Associate with investment managers JM Finn & Co.

Editor's Rant - what might Brexit mean for the world of financial services? Mike Wilson attempts to read between the lines.

Better Business Tracey Underwood of PACE Solutions has practical tips on perfecting your client engagement process

Richard Harvey A distinguished independent PR and media consultant.

Structured Products The view from Investec on this often misunderstood investment option

22 Tracey Underwood Founder of PACE Solutions

ESG Round Table Our expert panellists discuss how responsible investing is being integrated into advice and investment processes

The Senior Managers & Certification Regime Righting regulatory wrongs? Chris Brennan, partner, and Zeena Saleh, associate, at White & Case LLP look at the implications for advisers

Michael Wilson Editor-in-Chief editor @ ifamagazine.com

IFAs’ guide to Professional Indemnity insurance Daniel West of Apex Insurance steers you through the PI minefield

Take the weather with you

Sue Whitbread

Brian Tora reflects on the top performing investment companies of the first two decades of the new century

Editor sue.whitbread@ ifamagazine.com

Succession planning for IFA businesses Giles Dunning, partner and financial services M&A specialist at law firm, Stephens Scown LLP

Alex Sullivan Publishing Director alex.sullivan @ ifamagazine.com

Protection Defaqto's Ben Heffer asks how valuable are additional support services?

42 Kim Wonnacott Technical Sales and Marketing kim.wonnacott@ifamagazine.com

Don’t look back in anger It’s only natural, says Richard Harvey, that parents want to support their offspring no matter what age they are.

Career Opportunities From Heat Recruitment

Georgie Davey Designer georgie.davey@cliftonmedialab.com

IFA Magazine is published by IFA Magazine Publications Ltd, Arcade Chambers, 8 Kings Road, Bristol BS8 4AB | Tel: +44 (0) 1173 258328 © 2020. All rights reserved ‘IFA Magazine’ is a trademark of IFA Magazine Publications Limited. No part of this publication may be reproduced or stored in any printed or electronic retrieval system without prior permission. All material has been carefully checked for accuracy, but no responsibility can be accepted for inaccuracies. Wherever appropriate, independent research and where necessary legal advice should be sought before acting on any information contained in this publication. The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested. IFA Magazine is for professional advisers only. Full details and eligibility at: www.ifamagazine.com

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Februar y 2020

E D'S WE LCOM E

WIND OF CHANGE

s the brand new decade gets underway, matters of sustainability and environmental impact are already dominating the news headlines. Whether it is the likes of Donald Trump and Greta Thunberg making headline speeches at Davos or news of extreme weather conditions across the globe, this is a matter of universal importance and which is set to remain mainstream for the foreseeable future.

Brian Tora gives his thoughts on the top performing investment companies of the 21st century so far and Tracey Underwood has sound practical tips for financial planners on the client engagement process in her usual Better Business column.

But how does this theme impact upon the world of investment advice and financial planning? Is there confusion around the myriad of terms used to describe the growing relevance and importance of responsible or sustainable investing? Do advisers feel sufficiently equipped with the knowledge they need to make effective investment decisions when it comes to ESG investing? What about the risks?

There are plenty of other topics on the agenda this month. These include a brief guide to professional indemnity insurance, a legal perspective on succession planning for advisory firms, the implications of the FCA’s Senior Managers and Certification Regime and structured products.

These are just some of the questions which were up for debate and discussion at the IFA Magazine ESG round table event which took place in the autumn. In the forthcoming pages of this issue, we bring you our report on the event and highlight some of the main themes, opportunities and challenges which face the advice profession when it comes to matters of sustainability and impact investing. Our thanks go to all the participants who kindly came along and joined in the debate and we hope that you find the results of interest. Whichever term you use, responsible or sustainable investing, ESG or anything else, this is a topic that is very close to our hearts here at IFA Magazine. It’s also one to which we will continue to give prominence throughout the rest of this year and beyond.

We hope that you find content which gets you thinking and which you can put to practical use within your financial planning business. Sue Whitbread Editor IFA Magazine

THE BROADER PICTURE Beyond matters of ESG, this month’s IFA Magazine contains all the usual features and much more. Given the UK's formal departure from the European Union on 31st January, Michael Wilson is looking at what Brexit might mean for the financial services sector.

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E D'S RANT

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HERE WE GO, HERE WE GO, HERE WE GO… Brexit’s all over bar the shouting, to judge by what some people are saying. What does it mean for the world of financial services? Michael Wilson tries his cynical best to read between the lines

ell, at least it was decisive. Boris Johnson’s overwhelming December election victory might have been won on the strength of a simplistic word-soup slogan (“Get Brexit Done!”) that wouldn’t have earned you an English language GCSE, or even a decent Scrabble score, never mind an honourable mention in economics. But it was an important victory all the same, and one which has decisively set the country on course for what happens next. All we need to do now is decipher exactly what it all means, apart from the fact that Britain has formally left the European Union on 31st January? Not just for the City’s financial services sector, and its 115,000 employees - but for what they will and won’t be allowed to do hereafter.

SINGAPORE-ON-THAMES? Will London succeed in morphing itself into Singaporeon-Thames, a low-tax, free-trading and deregulated hub for global finance, as some have demanded? Will the nation’s capital manage to retain its European place by virtue of the ‘equivalence’ rules that should allow Britain to keep trading as long as its operations are functionally in line with what Brussels decides? (Note: the word “should” there ought to have been underlined and treble-sized in red, but the magazine’s designers won’t let me get away with that.) Or will the future lie in cutting completely loose from Europe’s rules in pursuit of

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a bigger international pot? And if we do that, will Paris and Amsterdam - and maybe Frankfurt - rub their collective hands with glee and gloat about all the new business that will surely flow in their direction if London disqualifies itself from the European game?

Will the nation’s capital manage to retain its European place by virtue of the ‘equivalence’ rules that should allow Britain to keep trading as long as its operations are functionally in line with what Brussels decides?

We honestly don’t know. For the moment, we know that Brussels has graciously proposed to extend the equivalence of London’s clearing houses for a time-limited period after their status runs out on 30th March 2020. What’s that? You didn’t know that other EU clearing houses were set to

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lose their access to London’s clearers in two months’ time? Perhaps you’d better read on? WHAT WE CURRENTLY KNOW We know that Britain’s continued membership of the European passporting system was never even remotely on the negotiating table, because it’s an integral part of the European Single Market, which we are absolutely, definitively leaving – as distinct from the European customs union, which we are only “probably” leaving. (Theresa May ruled out the idea of staying in the customs union last spring, and nobody had said very much in support of staying in by the time we went to press.) Mr Johnson has frequently given the impression that he doesn’t fully understand the distinction between the single market and the customs union, but perhaps that’s all water under the bridge now? Not least, because the customs union doesn’t relate to services, only to goods, so its usefulness to the financial sector was always debateable. Services, for what it’s worth, contribute 81% of the nation’s gross domestic product and 44% of its exports, of which half go to the EU. And financial services in particular contributed 7% of the UK economy and 10.5% of the entire country’s tax take during the year ended March 2019. That’s a cool $75 billion of tax, by the way. Ooof, that’s a lot of money to be putting at risk in a game of no-deal bluff. All is not lost, however. The City’s prospects are better suited by the equivalence rules, which seem to have gained a respite since last year, when the last chancellor, Philip Hammond, was slapped down by Mrs May for arguing in their favour. That’s where the fund management industry is applying its collective weight at the moment. Which is also helpful.

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Admittedly, things have got a bit more complicated since last spring. In principle, the government had already declared in its 2018 Political Declaration that it aimed to build a more robust and transparent “equivalence plus” regime. (I’m quoting from the Brexit and Financial Services Commons briefing here. https://researchbriefings. parliament.uk/ResearchBriefing/Summary/CBP-7628)

2019, the government would have been committed to maintaining the necessary standards for equivalence for at least two years after an eventual Brexit; but the bill was automatically lost at the end of the last parliamentary session, and, according to the Commons briefing, “maintaining alignment with the EU after Brexit will [now] require new primary legislation.”

But it all went wrong: “New institutional arrangements would have supported the approach,” the Commons report says. “But the details would only have been identified and negotiated after the Withdrawal Agreement was ratified. The October 2019 Political Declaration [however] gave less emphasis overall to close alignment, although the financial services text was identical.”

Which will be only one of many reasons why Brussels is currently looking askance at Boris’s assertion that he can negotiate the whole damn withdrawal by 31st December 2020, and that if he can’t, then Britain will leave the EU with no deal.

Unfortunately, another good intention got lost by the wayside at about the same time. Under the Financial Services (Implementation of Legislation) Bill 2017-

We know that Britain’s continued membership of the European passporting system was never even remotely on the negotiating table, because it ’s an integral part of the European Single Market, which we are absolutely, definitively leaving – as distinct from the European customs union, which we are only “probably ” leaving

Hmmmm. To quote the Commons briefing again: “A no-deal Brexit would make the quest for equivalence more difficult. The UK would revert to third-country status” “Both parties have made some provision for such a scenario to help ensure some continuity,” it adds. “The UK has developed a temporary permissions regime to allow EEA-based businesses to continue to operate in the UK and to seek more permanent authorisation from the Financial Conduct Authority. The EU has agreed and extended a temporary recognition regime for the derivatives market.” THEORY VS PRACTICE For what it’s worth, I’d say that London ought to have little difficulty in meeting the requirements of equivalence. UK financial services are streets ahead of the MiFID II standards; indeed, our very own Retail Distribution Review (2013) formed a template for a significant part of the new Brussels rules. Quite an eye opener for those of us who can still recall the days when small Italian investors existed to be fleeced by the big boys, and when Germany still allowed insider trading. (It was

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finally banned only in 1994.) Even today, there are plenty of eastern fringe member states where controls are (ahem) not very rigorously applied and where questions are not asked. We ought to walk it, then. But if we think that equivalence is our right, maybe we should consider the recent kerfuffle with Switzerland. Last July, without much warning, Brussels abruptly withdrew the rights of EU institutions to trade in the shares of Swiss companies and funds - thus effectively casting them adrift. (Specifically, it allowed the previouslyrecognised equivalence status of the Swiss stock exchange to lapse.)

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or perspicacity? And can we expect to get gentler treatment than the secretive gnomes of Zurich? Mr Dijsselhof was probably just blustering when he declared, brightly, that Brussels had in fact scored an own goal by suspending the EU-wide eligibility of Swiss shares, because he said it had boosted Berne’s domestic share trading volume by 30%. That might sound as though it ought to be music to Boris’s ears, but not so fast. It ignores the fact that London is the overwhelmingly dominant place where 40% of all EU assets are traded, and it would be a crying shame to lose that dominance. The exact inverse of Berne’s problem, then. HEADING FOR THE SUNLIT UPLANDS

The key article of faith, for hard Brexiteers at least, is that a Britain free of the EU’s shackles will be free to negotiate its own deals on mutually-agreed terms that don’t carr y an unwieldy overload of European regulations

Brussels had been accusing Berne for some time of dragging its heels in the implementation of various bilateral agreements relating to regulatory convergence; Switzerland’s stock market chief Jos Dijsselhof could only retort, in response, that the EU had resorted to a dirty political trick which amounted to holding his country hostage, so as to force the overall framework agreement. He went on to say that the UK was now going to get the same hard treatment as his compatriots. So was that pique

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Back to the drawing board, then? Not exactly. The key article of faith, for hard Brexiteers at least, is that a Britain free of the EU’s shackles will be free to negotiate its own deals on mutually-agreed terms that don’t carry an unwieldy overload of European regulations. And that its advanced tradition of light but effective supervision (take a bow, Margaret Thatcher) has placed London in an unassailable position. I for one have my doubts, not least because Mr Johnson’s eyes are firmly on the United States, where Wall Street is already spitting teeth about London’s dominance, and it would probably be glad of any possible opportunity to rein it in a little. Small wonder, perhaps, that so many UK institutions are preparing their parachute operations in readiness for (a) a Brexit with a deal or (b) the same with no deal. How many? Sources differ, but they all seem to be agreed that the race to deploy the parachutes is slowing down. The latest EY summary said in September that 92 of the 222 firms it had surveyed had publicly announced their

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plans to open bases in Ireland or the mainland EU. Another updated report from New Financial insisted in October, however, that 332 firms had already moved at least some jobs abroad – with Dublin and Luxembourg leading the way, and with Paris running a strong third. (But Frankfurt some distance behind.) Insofar as there’s a pattern, US institutions (Citi, Blackrock, JP Morgan, Bank of America) are showing a preference for Paris over Frankfurt, at least for banking business, while Dublin is picking up a strong showing among their asset management divisions. HOW IS THE UK INVESTMENT SECTOR RESPONDING? Given the high-rolling game of bluff poker that the Prime Minister is currently playing with Brussels, perhaps it isn’t surprising that so many institutions are hedging their bets by opening non-UK offices, which may become their EU headquarters, or then again they may not. They have shareholders to look out for, after all. But what is the UK fund management scene saying? Again, I’m afraid, the arguments are highly nuanced, and they change all the time. Last November, as the December election was approaching, the Investment Association raised a few hackles by insisting that although the City’s future relationship with the EU should be “underpinned by regulatory co-operation”, the UK should still be open to creating its own completely independent rules in areas such as fintech or sustainable investment. It was “not appropriate for the UK to be subject to rules which UK policymakers have not had a meaningful role in shaping,” the IA manifesto went on. Instead, the

government should foster international competitiveness “through a modernised regulatory system with the joint aims of protecting consumers, and keeping the UK as the world’s most attractive location in business, tax and regulatory terms for international investment management”. The day after the election, however, it was the IA that was coming under fire from prominent fund groups who declared that Mr Johnson should focus on maintaining close economic and investment ties to the EU, rather than going all out for the low-tax, lightly-regulated Singapore option. Richard Buxton, head of UK equities at Merian Global Investors, was quoted by the FT as rubbishing the Singapore idea, stressing that equivalence in regulatory standards was the key issue. Saker Nusseibeh, chief executive of Hermes Investment Management, reminded the government that the EU was “our most important market”, and that a strong relationship with Brussels was essential. And Patrick Thomson, the chief executive of JPMorgan Asset Management’s European, Middle East and African operations, reminded Mr Johnson darkly of the implications for employment and growth of diverging from EU norms and rules. And the IA’s response? “We need to be clear-sighted about the fact that post-Brexit the UK will have to pay its way in the world”, said chief executive Chris Cummings. “Ours is not a plea for a bonfire of regulation, but a call for rules that are proportionate, cost-effective and fit for purpose in the 21st century.” So there you are then, Boris. The experts have spoken. Take it away, it’s all yours, and good luck. But if you’re playing poker with Brussels, do remember that Brussels is playing a different, longer game. Chess.

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Februar y 2020

BETTE R BUSI N ESS

PERFECTING YOUR CLIENT ENGAGEMENT PROCESS When it comes to financial planning, whilst there is no standard engagement process, there are some common practises which advisory businesses can adopt in order to boost efficiency and effectiveness. Tracey Underwood of PACE Solutions offers some practical suggestions on how you can develop and refine your approach.

hen it comes to creating the perfect client engagement process, the good news is that once you’ve got the right processes in place, they can be replicated throughout the business creating consistency in the client experience and enhancing your brand into the bargain. Whether you are a financial planner, investment manager or life planner the questions which you ask your client may well vary, depending on which approach you take. However, there is some commonality between each business which we can examine and build on.

In this article, I will attempt to address the more common ‘high level’ processes which financial planning firms can consider as they strive for greater efficiency and effectiveness in delivering a financial planning service that clients will love. BACKGROUND Historically, some financial planning businesses may have adopted an approach whereby every introduction would have resulted in a meeting with the client; production of a report and transaction of some business (or the case of

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the latter, no business may have been transacted). Not only were advisers meeting with clients that potentially did not fit in with their business model but, by doing so without any fee charging structure in place, many were literally giving away their advice for free, diminishing their intellectual property as well as their profitability.

Once you have determined that there is a reasonable fit with a particular client then the next stage would be to conduct a discovery meeting to take things further.

Clearly it is not sensible for businesses to do this. Many advisory practices have now adopted an upfront fee charging structure, whereby the initial financial planning work is charged for prior to delivery.

This meeting gives the planner the opportunity to obtain a much broader picture of the client’s values and goals.

However, even before that point is reached, some preparatory work needs to be undertaken as part of the initial engagement in order to ensure a smooth experience for the business and the client. PRE-MEETING PREPARATION Before meeting with any new client or prospect, a few key details should be obtained, either from the clients themselves or an introducer. Of course, in the case of the latter, your introducer should have a good understanding of your business and its requirements so as to refer the ‘right’ clients. Having a few ‘high level’ questions ready for when you speak to a prospective client can soon filter out whether they are a suitable fit for your business and vice versa. Unfortunately, this is where some businesses fail. They will take on clients who are simply not suitable. This could be because they will not be profitable or the client and the business fail to agree. An example of this situation may be where the client actively manages their own investment portfolios and wants to continue with this philosophy when engaged by the firm.

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DISCOVERY MEETING

Mindmaps are now becoming a regular feature within client discovery meetings. Their use allows the planner to ask some key questions to the client such as: • What are your personal, non-financial goals? • What is important to you about money? Fact finds, although relevant to the overall process, can detract somewhat from the overall client experience. Nowadays, planners regularly adopt the approach of asking softer questions first and then sending the fact find to the client between meetings for them to complete almost as their ‘homework’. One crucial factor throughout the process is for the adviser to make sure that they collate detailed file notes. All too often, file notes will omit the ‘softer’ facts. If too much time has elapsed between the client meeting and writing up the file note, the end result can be that the information quickly becomes lost and/or diluted. Files notes are an important tool in the client process. Not only do they provide a concise audit trail for risk purposes but they also present the support team with a clear background to the clients’ needs and objectives. If you currently use a file note template, an added section of ‘Actions for Admin/Paraplanner’, works well and provides clarity to the support team.

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BETTE R BUSI N ESS

It may take more than one discovery meeting with some clients but, ultimately, the aim of this stage is to gain client commitment to proceed with the financial plan. It is also important to obtain as much detail as possible before you move on to developing the strategy which will underpin the planning process. STRATEGY MEETING The aim of this meeting is to outline the strategy required in order to meet the client’s objectives. Prior to this meeting a considerable amount of work will have been undertaken by the support team; from sending out letters of authority through to preparing the cashflow and financial plan. Once all of the information has been collated, analysed and a strategy formed, you’re ready to present the client with the financial plan. This will include statements and analysis of net worth and a lifetime cashflow forecast showing a variety of scenarios. Additionally, this could include an action plan which summarises the process and actions points necessary to implement the proposed changes. The strategy meeting should result in commitment from the client to implement the recommendations. IMPLEMENTATION MEETING Another meeting may then be held to implement the financial planning strategies. This will include completing the paperwork required to implement the plan. As there will be a significant amount of paperwork to be completed at this stage, you could include the administrator and/or paraplanner in the meeting process so that they can address technical and paperwork issues. This gives the opportunity for the client to engage with your wider support team and also to direct their queries to the most appropriate person. In summary, key to the ‘perfect’ engagement process is consistency but also learning from your client experience and adapting the process accordingly. Developments in technology will also mean that your processes are ever evolving. If you adopt this approach, you will not only ensure that you remain professional in front of your client and build a strong brand for your business but also minimise the amount of ‘non value’ work that may arise from the engagement process.

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STRUCTU RE D PRODUCTS

STRUCTURED PRODUCTS – THE VIEW FROM INVESTEC Michael Last, head of plan management and product design at Investec Structured Products, runs the rule over this often misunderstood investment option

or the majority of advisers, structured products are still a relatively niche asset class. Their perceived complexity, combined with the criticism that the structured products industry has faced in the past certainly divides opinion in the adviser community. Over the last 10 years we have seen the industry go through a significant positive transformation, which has contributed to making the structured products of today some of the simpler investment options available in the UK retail market. WHAT IS A STRUCTURED PRODUCT? A structured product is an investment with a defined term whose return is linked to an underlying asset; usually a major stock market index such as the FTSE 100. Unlike funds, structured products also feature a defined return profile depending on how the underlying asset

has performed. Using Investec’s FTSE 100 6 Year Deposit Plan 16 as an example; if the FTSE 100 has risen (by any amount) over 6 years, the product pays growth of 42%. If the FTSE 100 has not risen over 6 years, the product pays no growth and only returns the initial deposit. In other words, this product only has two return outcomes: growth of either 42% or 0%. This is different to a fund, whose future return is unknown. The defined nature of structured product returns is one of the reasons why advisers find them so useful when planning for their clients’ future. Structured products can be split into two categories: Deposit Plans and Investment Plans. Deposit Plans are the same as a fixed term deposit account. However, instead of paying a fixed rate of interest, a Deposit Plan pays a potentially higher rate of interest that is conditional on the performance of the underlying asset.

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STRUCTU RE D PRODUCTS

In all other respects, Deposit Plans are the same as a fixed term deposit; they are capital protected deposit accounts, feature a defined term and qualify for FSCS protection. Deposit Plans are generally considered as one notch above traditional cash products on the risk/return scale. They offer a higher potential return (or “interest rate”) than fixed term deposits, but they also feature the risk of paying no return at all if the underlying asset doesn’t perform in a certain way. Investment Plans are equity-linked corporate bonds. They feature the same pre-defined payoff characteristics as Deposit Plans, however they offer higher potential returns by introducing the potential for capital loss if the underlying asset falls by a certain amount over the product’s term. Investment Plans are generally considered as alternatives to traditional equity investments, such as funds. They sacrifice the dividends and uncapped growth potential of funds for pre-defined returns and partial capital protection (capital loss occurs if the underlying asset has fallen by a certain amount – usually 40%). Unlike funds, Investment Plans also expose clients to the counterparty risk of the issuer.

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When a client invests in an Investment Plan, the client is purchasing an equity-linked corporate bond issued by a bank. The bank is legally obligated to pay any returns due to the holders of the equity-linked corporate bond (i.e. the client) in the same way that the bank is legally obligated to pay coupons to the holders of its other corporate bonds. In other words, investors in structured products do not buy derivatives – their money is used to enter into a legally binding contract with a bank; either by depositing money into an equity-linked deposit account, or by purchasing an equity-linked corporate bond. How the bank generates the returns it owes on its structured products is at the discretion of the bank, however it will usually do this by purchasing derivatives on its own balance sheet. HOW HAVE STRUCTURED PRODUCTS PERFORMED IN THE PAST?

LOOKING UNDER THE BONNET

Structured products have delivered compelling performance over the last 10 years, as have most other equity-linked investments given the unprecedented bull market that we have experienced.

One of the common misconceptions surrounding structured products is that by investing in them, clients are buying derivatives.

Looking at the Investec Structured Products range, 651 of our Investment Plans have matured since 2008, paying our clients an average return of 9.12% per annum. None of our Investment Plans have ever resulted in a capital loss.

When a client invests in a Deposit Plan, the client is depositing their money into an equity-linked deposit account with a bank. The bank is legally obligated to pay any returns due to the client from their equity-linked deposit account, in the same way that the bank is legally obligated to pay interest to its other deposit account holders.

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The more interesting statistic is perhaps the performance of our Deposit Plans. Since 2008, 456 of our Deposit Plans have matured, paying our clients an average return of 5.43% per annum. These are compelling returns from a cash deposit and they underscore the value that our Deposit Plans can offer to clients who aren’t satisfied with the interest rates available from their bank.

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STRUCTU RE D PRODUCTS

HOW STRUCTURED PRODUCTS FIT INTO A CLIENT PORTFOLIO Deposit Plans are designed as alternatives to traditional cash products. They feature the same mechanics that clients require from their cash holdings (capital protection and FSCS coverage) as well as the flexibility to be held within a variety of tax efficient wrappers (ISAs, SIPP/SSAS and Offshore Bonds). What sets our Deposit Plans apart is the return potential that they offer – particularly to the £270bn currently sitting in cash ISA accounts. The best 3 year cash ISA deposit rates are currently topping out at 1.70% per annum, yet UK inflation is running at 1.5% per annum. Our Deposit Plans offer a much-needed alternative to clients that want to do more than just protect the value of their cash in real terms. Investment Plans are designed as lower-risk alternatives to traditional equity investments such as funds. Whilst the return of an Investment Plan may not keep up with a fund in a strong bull market, its ability to generate growth in flat or even falling markets will help to smooth the return profile of a portfolio. This is particularly the case for “defensive” Investment Plans, which pay equitylike returns even if the underlying asset falls by up to 35%. Furthermore, the partial capital protection offered by Investment Plans, whereby capital is only lost if the underlying asset falls by a certain amount (usually 40% or more), means that they can be efficiently used to de-risk client portfolios. We have seen an ever-growing number of advisers embracing structured products over the last 5 years. This has been aided by regulatory reform such as the FCA’s thematic review, PRIIPs and MIFIDII, which has significantly improved the transparency of structured product design and marketing, and dispelled many of the

negative preconceptions which have surrounded structured products in the past. Structured products are best suited to flat and uncertain markets, where their defined return profile and downside protection can offer peace of mind to investors who are looking for a high certainty of achieving growth over the medium term, irrespective of market movements. With uncertainty returning to markets amidst the backdrop of geopolitical tensions and global growth concerns, we expect structured products to become a more mainstream asset class for advisers in future. To find out more about the Investec Structured Products range, visit www.investec.com/structured-products About Michael Last Michael has been at Investec Structured Products for over 10 years. Having joined the team as a structurer, Michael now heads up the structuring and design of Investec’s range as well as writing its client and adviserfacing literature and marketing materials.

Important information Past performance is not a guide to future performance. This communication is intended for financial advisers only. Performance figures correct as at 31/12/2019 relate to Investec Structured Products, which is a trading name of Investec Bank plc. The product terms referred to are available until 31/01/2020. Investec Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

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TALKI NG TECH N ICAL

Februar y 2020

INTRODUCING THE IFA MAGAZINE ADVISER CENTRE YOUR SHORT CUT TO TECHNICAL EXCELLENCE

he new IFA Magazine Adviser Centre is live on www.IFAMagazine.com/ adviser-centre. It’s the result of our collaboration with the highly regarded technical team at Prudential. We hope that you will find it of use.

CONTINUING PROFESSIONAL DEVELOPMENT Whatever your approach to CPD, we hope that you’ll find the content of the IFA Magazine Adviser Centre relevant and informative. The content is updated regularly and covers topics such as:

We know that IFA Magazine readers appreciate detail. The Adviser Centre is designed to help you by providing easy access to a range of tips, tools and technical analysis which is all designed to support the financial planning process in practice.

• Pensions

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And that’s just for starters. The information is free to access, and available to all professional intermediaries.

The job of both financial planners and paraplanners is a complex one. Not only are you faced with a myriad of different solutions to help mitigate your clients’ planning dilemmas but also today’s ever changing world means that keeping up to date is becoming more and more of a challenge.

So what are you waiting for? Visit the IFA Magazine Adviser Centre now and see for yourself.

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• Tax planning • Regulation • Tools and calculators

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ESG ROUND TABLE LONDON

Februar y 2020

PARTICIPANTS Wayne Bishop

Harry Merrison

Director of Ethical Investing, King & Shaxson Ethical Investing

Investment Manager, Kingswood Group

T: +44 (0)20 7426 5968 E: wayne.bishop@kasl.co.uk

T: 020 7293 0734 E: Harry.Merrison@Kingswood-Group.com

Adrian James Mackenzie

Julia Dreblow

Director, Whiting and Partners Wealth Management Ltd

Director, SRI Services

T: 01945 581937 E: adrian@whitingandpartnerswm.co.uk

T: 07702 563702 E: Julia@sriServices.co.uk

Anastasia Grimaldi

Julian Barnard

Senior Investment Manager, Charles Taylor Investment Management Company Limited

Principal, Barnard Lee Associates

T: +44 20 3320 2311 E: Anastasia.Grimaldi@ctplc.com

T: 0207 627 4791 E: Julian@Barnardlee.co.uk

Belinda Thomas

Ketan Patel

Partner, Triple Point

Chartered Financial Planner, Prerak Financial Services

T: +44 (0)20 7201 8989 E: belinda.thomas@triplepoint.co.uk

T: 07771 997857 E: ketancfp@gmail.com

Ben Constable-Maxwell

Mike Daniels

Head of Sustainable and Impact Investing,

M&G

Director, Kingswood Consultants Ltd

T: +442039772284 E: ben.constable-maxwell@mandg.co.uk

T: 01869252545 E: Mike@kingswoodconsultants.com

Alex Sullivan Managing Partner, Clifton Media Lab T: 01173258328 E: alex.sullivan@ifamagazine.com

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Februar y 2020

ESG ROU N D TABLE

IS ESG AND RESPONSIBLE INVESTMENT SET TO ROAR IN THE TWENTIES? As we begin the decade of the twenty twenties, is ESG investing set to roar? What exactly do we mean by ESG? How far have we come towards achieving greater standardisation of terminologies when it comes to ESG and responsible investing?

s we begin the decade of the twenty twenties, is ESG investing set to roar? What exactly do we mean by ESG? How far have we come towards achieving greater standardisation of terminologies when it comes to ESG and responsible investing? At the IFA Magazine ESG roundtable discussion which was held last autumn in London, participants kicked off the discussion by focusing on the terminology involved and looking at how ESG often seems to mean different things to different people. There is little doubt that offering investments which are driving change is seen in a different light now. This is no longer optional for fund managers, itâ&#x20AC;&#x2122;s a necessity. Julia Dreblow is a specialist when it comes ESG investing. She runs her own business which is primarily focused on providing information on ESG or ethical investment funds. She agreed that ESG is often used as an umbrella term which covers a wide spectrum of investments which intrinsically pay close attention to ethical, environmental, social and governance issues. Interest in responsible investment is clearly growing across the board â&#x20AC;&#x201C; from the industry, policy-makers and regulators, investors and society at large. Tackling it is a challenge which the Investment Association (IA) has already set about with some gusto. Back in November, the IA launched the first

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ever industry-agreed Responsible Investment Framework and supplementary definitions which aim to bring clarity and consistency to the way these products are described and to make it easier for investors to understand the opportunities it presents. Ben Constable-Maxwell is Head of Sustainable and Impact investing at M&G Investments and is part of the M&G team integrating ESG into the overall fund management process as well as managing specific ESG focused funds. His view is that, from an investment perspective, ESG has shifted from something that was primarily around aligning people's values to something which focuses on those ESG factors that are material to the value of funds. As he summed up, “It has moved from values to value.” However, he was keen to stress that what motivates investors from a personal perspective is still an important driver and that the two factors shouldn’t be disassociated. Julian Barnard, a one-man band IFA from South London, put a slightly different slant on it, seeing his role as interpreting what the client feels is ESG, and finding the solution that fits. Ethical means different things to different people, “...so it’s my job to delve into what they believe they want, and then try and match that up with funds which are out there. I need to find out whether what my client means by ESG matches up with what the fund manager believes.” Adrian Mackenzie, a financial planner and director of Whiting & Partners, took a similar view. “You have to take into account how strongly they feel, whether clients want to be prescriptive about what they invest in or just want to feel like they’re doing some good. We find there’s more of that nowadays, they don’t want to limit their investments but want to know they’re making a positive contribution.” The panel were united in recognising the need to “look under the bonnet” of funds. It’s all very well to tuck “ESG” away somewhere in the marketing blurb, but as Michael Daniels, director at Kingswood Consultants said, “What investors are looking for is honesty, integrity and ‘it does what it says on the tin’. You don’t want to expect vanilla and get raspberry ripple, it needs to be clear what the fund is providing.” Julia Dreblow referred to Fund EcoMarket, a free-to-use database that she runs which has about 100 different criteria with regard to ESG, observing “There’s nothing more dangerous for an advisor than finding they put someone into a fund that doesn’t do what it says on the tin.” Transparency is crucial, according to Ben ConstableMaxwell. “The development of ESG has been a necessary and really great development, but it’s come with some challenges. One of the challenges is that it’s a bit of a hot topic and I think there's potential for greenwashing, with the marketing spiel occasionally overclaiming what goes on in reality. So, I think our industry has a responsibility to get

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this right. Transparency is the best medicine, so we need to be clear what’s in our fund, what it’s intending to do. It’s good to have a fund strategy that pushes for improvements; pushing for change is a valid approach, you just need to be transparent. With impact funds transparency is one of the core principles. We must be whiter than white as we are mindful of the risks of being accused to greenwash if we don't do it properly.... Open dialogue with customers is important to understand what they want from us and ensure we live up to their expectations.” Michael Daniels agreed, quoting the example of an environmental fund fronted by a celebrity scientist which, it later transpired, had been linked to the killing of bats. Wayne Bishop, CEO of King & Shaxson Ethical Investing, gives advisors questionnaires to take a human belief system to something that’s tangible and usable. “When you talk to people about ethics and their ESG beliefs and the impact they want to have, it does vary. Having a process, a questionnaire, or talking it through will give you an idea of how to take it forward.” “We have a policy that 3 people look at a fund. I like to be cold and unemotional when I look at something; my colleagues will tell me why the client believes in it. You get different people looking at it differently. One of the hardest things for an advisor is that you have to engage and have an honest conversation, we then have to assess that. “I’ve learnt over the years, to only look at what they do, not what they say, and I look straight to the holdings. We also constantly monitor. With Shell, they took over BG which was quite a clean energy company but when Shell took over they were at the other end of the spectrum and we found most funds disposed of Shell very quickly. Fossil fuels has been one of the biggest changes in the last 10 years. 90% of people don’t want to go anywhere near fossil fuels, it’s been a real shift in behaviour. One of the hardest things is maintaining the ethical dialogue as there’s a sense of fashion and fluidity in it.” Harry Merrison, Investment Manager at Kingswood Investment noted that with regard to oil and tobacco, “Ethical indices have outperformed the main markets. I know you’re getting a big yield but at what cost? Arguably ethical investment can be considered less risky – why wouldn’t you want to invest in a company that’s good for the environment, society and well governed? They’re better custodians for investor capital longer term.” This steered the discussion to ESG and the risk implications, which we report in the next article.

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ESG ROU N D TABLE

CONSIDERING RISK AND ESG When IFA Magazine hosted an ESG roundtable back in the autumn, the discussion turned inevitably to the risk implications of ESG investment.

hen IFA Magazine hosted an ESG roundtable back in the autumn, the discussion turned inevitably to the risk implications of ESG investment.

When you ask clients if they’re interested in ethical investments, they want to know the trade off, either added risk or reduced performance. It’s a difficult conversation to have with them and get them to understand if they’re taking on extra risk. Julian Barnard, Principal at Barnard Lee Associates, noted that it’s something Mark Carney, Governor of the Bank of England has been talking about. “From a risk profile, if companies haven’t embraced some sort of positivity towards it, they’ll have to in the future. From my perceptive, I’d always put impact investing as riskier than ESG, that’s because you’re screening out a whole lot more stuff, you’re probably going into smaller companies and into a bigger risk dynamic.

Belinda Thomas, partner at Triple Point, commented that Triple Point approach impact investing through their EIS product, as such “this entails investing in smaller companies to be eligible for the associated tax breaks.” “Of course, it’s a different risk profile than investing in the equity of a FTSE 100 stock, but as advisors you have the ability to step outside only investing in large cap equities and look at other ways of fulfilling the investment needs of your clients, such as using EIS for the private equity part of a portfolio. “When we are targeting smaller businesses, as part of our Impact EIS Service, we target both financial reward and impact. The higher return the more impact created; if they don’t make a return then they won’t have a good level of impact.” Julia Dreblow, Founder of SRI Services, also focused on impact. “A lot of impact funds do invest in smaller companies and sometimes they will do better than other

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funds, sometimes they may do worse. What matters most is what the client wants. If they are happy with mid-sized companies, for example, that’s fine – but you need to keep the bigger picture in mind. Rules and regulations are changing particularly in relation to climate change. Investors have the choice of being ahead of the curve or behind it, but keep in mind that all other factors being equal those ahead of it should prosper as they are better equipped to deal with growing challenges and emerging opportunities.” Ben Constable-Maxwell, Head of Sustainable & Impact Investing at M&G, noted that “ESG focuses on the material environmental, social and governance risks and on how individual companies are managing those risks and related opportunities. ESG investing can improve the risk profile of your investment; with a long-term mindset you want to know how companies that you invest in are managing those risks. We think that a company with high ESG characteristics can have lower volatility and produce higher returns than the overall market. We think ESG investing is a sensible way of thinking about risks. It's not about what you're excluding, it's about investing in quality companies. Impact investing is different. With impact, you're investing in and how their business helps address climate change or improve societal outcomes. I think these companies, when selected carefully, are not necessarily higher risk and are really exciting to invest for the long term. ” Julian Barnard added a note of caution; “How you define risk isn’t the way the FCA does. If I’ve got a medium risk client and I put them in there, I’m immediately at risk myself. Secondly, where the risk is amplified, say you want to go into a managed fund, there are plenty of ethical funds as good as its counterpart. You get a much smaller pool and putting together a portfolio, you start to find it hard to be able to find ethical funds in those spaces and it makes it more difficult to put together a portfolio that’s completely ethical. That’s where the risk is amplified.”

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“ESG investing doesn’t exclude the majority of the market, it just focuses on better performing businesses and reduces the long-term volatility risk”, was Constable-Maxwell’s view. “Across ESG there’s a famous example of an auto manufacturer that had flawed governance standards, with an all-powerful board with very ambitious goals. It was because of governance deficiencies that Dieselgate materialised with huge negative financial outcomes. There are examples of companies that are not managing their cyber secutrity risk and the ownership of data properly and are being fined millions on those companies.” On the question of risk, Michael Daniels, Director at Kingswood Consultants, suggested that political risk is often the most significant factor. Wayne Bishop, CEO of King & Shaxson Ethical Investing, pointed out that 30 or 40 years ago, no one thought the tobacco companies would be sued the way they were. “There are lawsuits going out against oil companies, drug companies who used opiates and I think it will persist. The FCA are saying you have to take climate change risk into consideration, and you can’t ignore it anymore. Risk to me is the risk of losing money. That can happen after bad management, having the wrong product and it also comes from not reading which way the wind is blowing. In environmental areas, we know which way it is blowing. We have no fossil fuel exposure, we’ve replaced it with wind and solar. Although they have their own risks, George Osborne changed the risk profile, but we know which way the wind is blowing, quite literally. The risks are getting higher and higher for oil and coal, and this trend will keep growing into the future. There are lots of reasons to see risks building up. I have respect for the regulators but they’re very reactionary, whereas money isn’t reactionary, and your client’s wealth isn’t, so there needs to be more focus on what the future risks will be.” The discussion then moved to ESG in practice, which is covered in the next article.

Februar y 2020

ESG ROU N D TABLE

ESG IN PRACTICE – SELECTION AND ASSESSMENT

t a lively IFA Magazine roundtable session covering all things ESG, Adrian Mackenzie, Chartered Financial Planner and Director at Whiting & Partners, asked “On the subject of risk, a way we would reduce risk is looking at different asset classes. There are more choices in equities, but if I want to introduce other asset classes like property and fixed income, there is a lot less choice. It’s a way I can reduce the overall risk, so how do I go about that?” Ben Constable-Maxwell, Head of Sustainable & Impact Investing at M&G concurred. “I do think the availability of products is definitely limited outside of equity and M&G is working on that. We recognise there are fixed income investors who want a good ESG fund in investment grade or high yield bonds and our industry needs to deliver that supply as well as integrating ESG into all our funds.” The discussion moved along to property and social housing; Belinda Thomas of Triple Point noted that “Property is one of the things Triple Point has with

social housing providing accommodation for vulnerable members of society who need help from the state through the Triple Point Social Housing Reit (‘SOHO’). It’s an investment trust and is a property fund you can look at.” Infrastructure and alternative energy investments were also mentioned, but the discussion shifted somewhat when the chair. asked Ketan Patel, Chartered Financial Planner at Prerak Financial Services, what his clients were saying to him. “I’ve been asking the ESG question very briefly, mainly due to the time required to explain the intricacies of the investment. Most clients do not understand the full nature of the investment and leave it to me to decide. On one occasion, a couple started arguing over who they should sell their business to and this showed me that clients do have strong opinions. I believe ESG is probably lower risk because the companies you are investing in are doing things the right way. Having seen companies get into trouble because of debt or accounting scandals, I think this is the right way of investing. However, my hands are tied when it

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Februar y 2020

comes to putting client’s money into these investments as I have to follow the rules when it comes to assessing risk.” Michael Daniels, Director at Kingswood Consultants, observed, “In my experience, most IFAs are very sceptical, we’ve had too many false dawns in our industry and very often we have on one hand the client’s needs and their objectives and we have to balance that against all the risk and we then have to deal with the regulator. It’s not necessarily a compatible existence. When I hear about social housing funds, a knowledge about the range of products available is a foggy area as these companies don’t promote themselves to the IFA market, so we have to go looking for it. This means time away from our office and clients. As a firm, we never have a problem giving a balanced ESG portfolio. The important thing is we need to have an improved knowledge of how the market is changing and emerging, which takes time. Julian Barnard, Principal at Barnard Lee Associates, added: “There are the asset classes out there where you can put together a perfectly reasonable portfolio for a client and their risk dynamic. Our job is to communicate to clients what’s involved, what the risks are, and yes you can find them, but you have to brutally narrow down the field in terms of the fund range available. Once you narrow down that range, you automatically increase the risk and you can’t get around that. The investments you make might not be any riskier than a non-ESG counterpart, but if you’re the only one in the field then I’ve increased the risk as you may be rubbish at your job.” Julia Dreblow of SRI Services added that “in some areas there is limited fund choice but this challenge is gradually evaporating with a combination of new launches and existing funds upping their game.” The question arose that with impact funds, what’s the due diligence to mitigate risk and how do you communicate that to advisors? Harry Merrison, Investment Manager at Kingswood sees it as an opportunity; “As part of our due diligence, we talk

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about ethical preferences – it’s a massive opportunity. I’m interested in thematics. Clients will talk about clean energy or gender equality, the universe is quite broad for those. We add ethical overlay into private client institutional funds as par for the course. It’s a great opportunity to offer clients what they want – there are so many funds out there.” Belinda Thomas, Partner at Triple Point, explained, “The due diligence we go through is the same for any private equity investment - whether they have a good management team, whether the business is scalable and sustainable. We also look at our impact measurement to ensure the funds going into the company will be additive. Within our Impact EIS Service, we’ll only invest in companies whose products are either in healthcare, inequality, environmental issues or children and young people. We report back to investors on a 6-monthly basis; part of that report will have the financial return and as we measure the level of impact we also give a monetary value, so you can compare the impact achieved. We measure impact by looking at KPIs that we agree with the company we’re investing in right at the beginning, ensuring they are both measurable and the company can provide the information easily.” Ben Constable-Maxwell added, “With impact, one of the factors that you need to identify during the due diligence is intent or intentionality, that’s identifying companies who are walking the walk. We spend a lot of time focusing on intention and if it’s genuinely carried out. If we say we're doing this and the fund is delivering impact, it needs to be evidenced. It cannot be just nice marketing materials. We must demonstrate that we are doing it right and seriously across our whole investment process.”

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ESG ROU N D TABLE

Belinda Thomas agreed: “We’re one of the largest lessors for the NHS and were one of the first people to bring leasing as an asset class to investors. Our intention of doing that was bringing a really good riskadjusted return to retail investors, it wasn’t to necessarily find something ethical or ESG focused, it was just a good business opportunity to get a good solid return for investors that happens to create broader value for society.” IFA Magazine publisher Alex Sullivan asked if there was a percentage of clients who want more than just returns on their funds. Julian Barnard replied, “Quite a few but if you looked at my client base, because of the way I work, and I work at home, I live in Clapham so you get a more left-wing bias in my client box, rather than the people who would go with a suit and tie. Ethical criteria are probably much higher on the list. There aren’t too many people, about 5% will say specifically, but I guess with ethical being a criterion, it’s about a 60% response. The only person I’ve ever asked if they want ethical and didn’t was a vicar’s wife.” Michael Daniels had a general observation: “The main role of the IFA is to manage client expectation. It’s been well researched by Schroders, most clients want 10.7% return per annum, preferably without risk. I was the first IFA in the UK to introduce the question about if they were concerned about how their money was invested. I’ve only had one client who said they didn’t care how they make money. There was a company importing cigarettes from Russia known as ‘death cigarettes’ so I said we’d invest in them, he said he wouldn’t want to invest in them, so that

showed he did have a concern, you can then use that to develop a better relationship with the client.” Adrian Mackenzie had another question: “What indices should I use to measure ESG / sustainable / ethical investments?” The M&G view was that most funds in the ESG space will either have a normal standard benchmark, or increasingly use ESG versions of those benchmarks. “There are different views on the right approach to take. For our positive impact fund, we use MSCI All Countries World. We haven't used an ESG benchmark but we could have done. I think that when you are in the impact world, funds tend to be very different from the benchmark as they focus exclusively on those companies that do good for society or the environment.” Wayne Bishop, CEO at King & Shaxson Ethical Investing summed up: “I would resonate what’s been said. Fashions come and go, I’ve been doing this since 2002 when you were the weirdo in the corner and people thought it wasn’t serious. People underestimate that this is underwritten by real consumer desire and generational changes. There are a lot of older people driving this as well. It’s also politically desirable and it’s hard for politicians to go against ESG requirements. You can see that there’s a political driver as well as a personal driver, but above that there’s sound business sense. A lot of people providing ESG, they didn’t just wake up and think they could provide ESG, there are also companies doing this as it makes good business sense. It’s not just one thing, it’s all three operating in the same direction so it’s not just a trend but the way things are going to be. When we talk about transition, it’s happening on every front, and in 10 years’ time, the conversation will be quite different. This will be mainstream.”

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Februar y 2020

WH ITE & CASE LLP

THE SENIOR MANAGERS & CERTIFICATION REGIME –

RIGHTING REGULATORY WRONGS? As of 9 December 2019, the Senior Managers and Certification Regime (SMCR) became applicable to almost all firms regulated by the Prudential Regulation Authority and the Financial Services Authority, demonstrating that individual accountability remains a key priority for regulators. Chris Brennan (partner) and Zeena Saleh (associate) of White & Case LLP outline the key changes and implications for us.

he global financial crisis spurred a flurry of regulatory activity – large cross-border investigations, record fines and a thirst for more individual accountability – giving further credence to the third law of regulation; for every market action, there is an equal and opposite regulatory reaction. While regulators have long been successful at holding firms to account for wrongdoing, they have had much less success holding individuals to account. The view from the regulator was that the failure to discipline individuals is often caused by difficulties in attributing control failings to particular individuals, for example, because of collective decision-making. SMCR was established following the recommendations of the Parliamentary Commission on Banking Standards. The regime seeks to reduce the pool of senior individuals directly approved by the regulators, while encouraging individuals to take greater responsibility for their own

actions. It is also designed to make it easier for firms and regulators to hold particular individuals to account for a regulatory failure within a firm. It was first applied to banks from March 2016 and later applied to all dual-regulated firms from December 2018. To further ensure (as far as possible) a consistent approach across the financial services industry, as of 9 December 2019, the regime was extended again to apply to the 47,000 solo-regulated firms. Firms will have one year (until 9 December 2020) to take certain steps required by the regime. So, what are the implications of this for soloregulated firms and what measures should firms be taking, if they have not done so already? KEY CHANGES SMCR aims to “…encourage greater individual accountability and sets a new standard of personal conduct in financial services …” with a view to strengthening

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confidence in the financial services industry and ultimately reduce harm to consumers. The extended regime applies to a vast and varied group of firms. The FCA has taken this into account proposing a proportionate and flexible approach to the application of the regime. This is demonstrated by the FCA’s categorisation of firms – limited, core or enhanced – with the regulations under SMCR applying to such firms accordingly. This short article does not seek to set out all the changes brought about by SMCR. However, the key changes can be summarised into the following three categories: 1. Conduct Rules – – the Conduct Rules replace the Statements of Principle and Code of Practice for Approved Persons (APER) and applies to a broader group of employees. 2. Senior Managers Regime – Senior Management Functions (SMF) replace the previous Significant Influence Functions. Each senior manager must obtain pre-approval from the FCA prior to starting the role. The regime introduces prescribed responsibilities to be allocated to SMFs and the concept of a ‘Statement of Responsibilities’ for enhanced firms which should clearly articulate what that individual is responsible and ultimately accountable for. 3. Certification Regime – The Certification Regime applies to employees in positions where it is possible for them to cause significant harm to the firm, its customers and the market more generally. These individuals will not require pre-approval from the regulator before starting the role but must be certified as fit and proper by the firm.

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2. SMCR has effectively reduced the number of SMFs requiring FCA approval and increased the number of employees that would fall within the certification regime. This places a greater onus on firms. While those holding a SMF will need to obtain the FCAs pre-approval before taking on the role, the burden of assessing a certified employee’s fitness and propriety is now on a firm. Although previously firms would always make an assessment of an individual’s fitness and propriety, the regulator would always have the final say. Firms are now required to reach their own decision on this issue and face the consequences if they get it wrong. Firms are also required to provide regulatory references to a new employer and, given the new employer’s degree of reliance on the reference, will need to carefully consider what information to include and the appropriateness or adequacy of such information. 3. In terms of individual accountability, it should be easier for regulators to identify who is responsible for any given issue within a firm. However, the assessment of whether an individual is culpable for a regulatory failing remains the same. While the new regime introduces some specific rules, any enforcement action is likely to focus on the question of whether the person took reasonable steps. While this is not always easy to demonstrate, it is a relatively low threshold. The problem is that although the FCA has to establish that the individual failed to take reasonable steps, the practical burden will always fall on the senior manager to demonstrate what they did to fulfil their regulatory obligations.

KEY IMPLICATIONS

IS IT ENOUGH TO RIGHT PAST WRONGS?

While it is certainly hoped that, in practice, firms and their senior individuals were acting in a way that reflects the spirit of the new regime, SMCR still arguably constitutes a significant practical change - expanding its reach, placing more responsibility on firms and a greater emphasis on individual accountability. Some key implications include:

The introduction of SMCR is a positive step for the industry in many ways. Establishing who is responsible for what within a firm, provides clarity for regulators, firms and individuals alike. However, in larger firms, the ability to attribute culpability for a control failing is unlikely to be as ‘black and white’ as it might appear on a Statement of Responsibilities. The regulator must be careful to avoid trying to create a culture of strict liability. The fact that an issue is said to be the responsibility of a particular individual, does not mean that individual has to take the blame. Life is never that simple – not even in politics.

1. Conduct rules have a broader reach, applying to a larger pool of employees when compared to the previous APER regime. Firms will need to ensure that its employees are aware of the conduct rules as they apply to them.

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I NSU RANCE DOCTOR

INSURANCE DOCTOR An IFAsâ&#x20AC;&#x2122; guide to Professional Indemnity insurance. Daniel West of Apex Insurance steers you through the PI minefield

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I NSU RANCE DOCTOR

here have been many claims that the Professional Indemnity (PI) insurance market is the biggest threat to IFA businesses in 2020. There is a noticeable shortage of insurers and capacity in the market; also, rather than offering fully compliant cover, many of the remaining insurers are adding restrictions and large excesses and an increase in premium to go with it. Firms with restrictive cover have had no choice other than to increase capital adequacy as per the FCA handbook. Those firms who have been involved with DBTs are struggling the most as many are finding they are not being offered renewal terms at all. Typically an IFA would have been paying between 1-1.5% of their turnover in PI premium; now I have seen renewal terms soar to 4-5% with several restrictions. I hope that this guide can assist you in obtaining the best possible cover at the most competitive price. 1. BEGIN YOUR RENEWAL PROCESS EARLY Due to the shift in the market we aim to invite all IFA renewals at least 8 weeks before the renewal date; if the renewal is left to the last minute, you may not get the best available price. Starting early will give you and your broker the time it takes to work on your submission and negotiate the best policy for you.

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3. WORKING WITH AN EXPERT Ensure your PI broker is experienced in dealing with IFAs in this tough market. I would suggest testing the market at your renewal, but I would not approach several brokers. You will find many brokers have access to the same insurers and can jeopardise your position – insurers tend to decline to quote if they have seen your submission multiple times. The broker should be open and honest with you, whether it is best for you to stick with your insurer, or to test the market for alternatives. They should know which insurers have pulled out of the market, which have been offering increased premiums and less cover, and which insurers are still underwriting this business. IN CONCLUSION Hopefully this will help prepare for your renewal and provide you with a bit more insight into how the PI market works. The market for IFAs is tough and less straightforward than it was previously, but by being proactive and concentrating on your renewal, you reduce the chance of a negative outcome. We can all hope that this is just a bump in the road for IFA PI and the situation will improve in the future.

2. YOUR SUBMISSION A rushed and untidy proposal form with poor responses or ignored questions will impact your chances of obtaining a quotation; ensuring the presentation is correct in the first instance is extremely important. The days of the short renewal forms are over. A 20-page proposal form and several questionnaires can be time consuming, but this will give you the best chance of obtaining a quotation. I have seen many cases where DBT exposure isn’t properly detailed in submissions resulting in a refusal to quote from insurers. As an IFA specialist, we work with our clients to ensure this is properly presented to insurers.

About Daniel West Cert CII – Associate Director Daniel has been with Apex Insurance Brokers for 5 years and specialises in the placement of IFA and Financial Institution Professional Indemnity Insurance (PI). As an independent broker, Apex can offer one of the most extensive choices of IFA insurers available, with specialist sector and product knowledge to offer their clients some of the best terms available in the market. Their extensive IFA insurance experience allows them to fully understand your business, advise how to best present your risk and what insurers are best suited to your firm.

Ensure your facts and figures are accurate, clearly detail your DBT exposure and include any relevant information that will assist your case (DBT processes, claims register, explanations for large changes in turnover).

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Februar y 2020

BRIAN TORA

TAKE THE WEATHER WITH YOU As we enter a new decade, which were the investment trusts which sparkled most brightly in the first twenty years of the twenty first century? Brian Tora looks at the detail

o here we are in the third decade of the twenty first century. Is it really more than twenty years since we were all worrying about how the millennium bug might freeze all cash machines and result in planes falling out of the sky? And do you remember that first technology bubble which burst early in the year 2000, causing much upset to markets worldwide? I certainly do. Yet technology remains at the core of investment thinking these days, with the largest companies in the world technology titans. TOP OF THE INVESTMENT COMPANY POPS Surprisingly, technology did not feature in the top ten of best performing investment companies since the start of the new century. According to a table compiled from the Association of Investment Companiesâ&#x20AC;&#x2122; statistics, the best performing trust from the start of 2000 to the end of 2019 was TR Property, returning a staggering 1890%. Given the recent upsets in the property market, this seems a

remarkable result for an asset class that many will consider falls into the legacy category. Not that any other property trusts featured amongst the winners. Property, of course, fits in better with a closed-ended fund as the managers will not be under pressure to sell assets to meet investor redemptions. Many of the other top performers in the first twenty years of the twenty first century were invested in more liquid assets, though by no means all. Two private equity trusts feature in the top ten, the better performer, Hg Capital, coming in at number five returning a respectable 1456%. Once again this is an asset class which can suffer liquidity issues, so a closed-ended approach must be the better option. Aside from the second-best performing investment trust, Worldwide Healthcare which delivered plus 1550%, there is a strong smaller companies bias amongst the best performing trusts over the past twenty years. Asia also features heavily, with Scottish Oriental Smaller Companies, Aberdeen Standard Asia Focus and Aberdeen New Thai

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BRIAN TORA

making up the remaining constituents of the top six performing investment trusts in this table. Aside from BMO Private Equity, which comes in at number seven, the remaining top ten performers are all smaller companies trusts, focussed principally on the UK. LIQUIDITY MATTERS This throws up an interesting point. The regulator is already concerned over liquidity issues in open-ended funds and the administrator of the Woodford funds has highlighted other funds with which it is involved as having potential liquidity issues. Needless to say, these are those engaged in investing at the lower end of the market capitalisation tables where selling to meet redemptions could at times prove tricky. I have personal sympathy with this concern. For some years I was a non-executive director of a smaller companiesâ&#x20AC;&#x2122; investment trust within the Aberdeen stable. At our regular board meetings, the managers provided us with three valuations of the underlying portfolio. The first was the statutory one used to calculate the net asset value. Then came a valuation based on the bid value of the shares contained within the portfolio. Finally came a so-called fire sale value which provided an estimate of what might be raised if, for any reason, we had to liquidate the entire portfolio at once. Unsurprisingly, this value was way below the other two, but this was an investment trust, so surely the third option would never be used. Or would it? As it happened, this proved a useful measure when a corporate raider built up a stake in the trust with the intention of forcing a liquidation of the portfolio and the winding up of the trust. This was some years ago when discounts on investment trusts were somewhat higher than

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Februar y 2020

they are today in general, so the raiderâ&#x20AC;&#x2122;s plan was to unlock the value contained within the discount. Would that it was that simple. The life of the trust was brought to an end, but not by simply selling the shares it owned. Instead it was split between three entities, which allowed the corporate raider to realise some value from the investment and those who wanted to stay in or bail out to do so at minimum cost. But it did serve to remind me that liquidity is something any portfolio manager must take into account when choosing what sort of vehicle to choose for his or her clients. LOOKING AHEAD So much for the past, but what might this coming decade have in store for investors? Certainly, risk assets have delivered the goods in the past and might reasonably be expected to do so over a long period in the future. The problems, as always, are picking the right manager and ensuring that your clientsâ&#x20AC;&#x2122; circumstances are not likely to interfere suddenly with whatever long-term investment strategy you have put in place. Smaller companies and private equity both seem to remain strong contenders for those able to lock their investments away for a long period, while the long-standing argument that the Far East contains large populations with a strong work ethic anxious to catch up with the living standards of the developed world is as true today as it was when this millennium first started. In other words, expect more of the same. Just be careful to keep a weather eye on things as the decade progresses. Brian Tora is a consultant to investment managers, JM Finn.

Februar y 2020

SUCCESSION PLAN N I NG

SUCCESSION PLANNING FOR IFA BUSINESSES By Giles Dunning, partner and financial services M&A specialist at law firm, Stephens Scown LLP

t is fair to say that the landscape has changed for professional advisers in recent years, none more so than for IFA businesses.

Since 2012, we have seen the Retail Distribution Review radically overhaul the way traditional IFA services are provided and paid for. There has been a wave of consolidation in the sector which shows no signs of slowing down as well as a gradual but steady change in the demographics of the profession. Many advisers have opted for retirement, with younger advisers obtaining chartered status. But the changes have not stopped there. MIFID II and GDPR have brought with them further demands in terms of compliance, added to which, the cost of professional indemnity insurance is also on the rise. This is due to a spotlight being thrown on perceived risk areas such as defined benefit pension transfers. All professional firms are now having to invest in their IT infrastructure simply to keep up. Artificial intelligence (AI) looms large for professional services firms and those that do not invest in and embrace this AI will surely fall by the wayside. Against this challenging backdrop, what is the future for IFA businesses both in terms of survival and ambition? JOIN TOGETHER The obvious solution for many firms in the last five years has been found in consolidation. The move towards advisory-based charging models post-RDR created an opportunity for IFA businesses by enhancing their key assets - funds under management and the re-occurring income derived from them. Financial planning firms, including Succession Wealth and AFH, have been in a race to acquire funds under management through multiple acquisitions of IFA businesses. Larger acquirers give smaller firms the chance

to be part of something bigger, offering a greater range of services and expertise and ambitious growth plans. Whilst the benefits of acquisition are clear for consolidators, they have also solved many difficulties by taking the problems outlined above off the hands of smaller IFA businesses whilst enabling their owners to realise full value in what they have built up. During this period, favourable tax treatment has been available for many IFA business owners in the form of entrepreneur’s relief. The pace of consolidation shows no signs of slowing down in 2020 and we can expect to see many more IFA businesses opt to go down this route. WHAT OTHER OPTIONS ARE THERE? Selling to a consolidator is a well-trodden path, but what other options are there for IFA businesses in terms of long term planning? I have acted for many owners of IFA businesses and almost invariably their main concern is to protect the interests of their clients and staff. Therefore, it is critical to select a long term plan to suit these businesses and their stakeholders. Business owners may look towards succession planning from within their own firm. There are some difficulties here as an adviser will need to demonstrate the appetite and ability to run their own firm and to meet the inevitable challenges – as set out above. Coupled with this is the need to raise finance. Many younger advisers (many of whom will be facing the dual pressures of raising families and paying mortgages) will find it, at the very least, challenging to raise the capital to buy out the current owners. That is not to say it is impossible – we have seen lenders willing to lend against cash flow projections based on historic trading performance and opportunities are there for younger advisers who are looking to acquire their own client books. The traditional model of IFA businesses engaging their advisers on a self-employed basis is under threat with increasing HMRC scrutiny in respect of employee status.

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SUCCESSION PLAN N I NG

We are, therefore, seeing more IFA businesses moving away from self-employed structures towards employed models. Whilst some may say it makes the sector potentially less â&#x20AC;&#x153;entrepreneurialâ&#x20AC;?, it does provide opportunities of its own in terms of greater job security for advisers and a move towards employee ownership models, examples of which we have seen in recent years with both Paradigm Norton and Ovation Finance being transferred to employee ownership trusts.

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About Stephens Scown Stephens Scown has over 300 staff, including more than 50 partners, across its offices in Exeter, Truro and St Austell. The firm has been ranked for four consecutive years in the Sunday Times 100 Best Companies to Work For

Even if a firm is able to successfully negotiate succession planning, the ongoing challenges and threats still exist. As we have seen in the legal sector, it is likely that smaller IFA businesses will find it harder to remain viable as PI costs rise, and ever greater resources are required for compliance and investment in technology. As such, those firms wishing to remain independent will either need to grow to meet these challenges or collaborate with other similar sized firms either informally or via mergers between firms. OPPORTUNITY KNOCKS So, if IFA businesses can meet the various challenges which may threaten their long term survival, what opportunities do they have? As the need for financial planning advice increases across generations, these opportunities are there. IFA businesses now play a key role alongside solicitors and accountants in providing holistic advice to individual, corporate and business owner clients. We have seen a big push by IFA businesses in recent years to engage particularly with business owners as well as offering more traditional wealth management advice to older, high net worth individuals. Smaller independent IFA businesses may still have an advantage over larger competitors in terms of providing personalised bespoke advice tailored to the requirements of individual clients and they will need to capitalise upon this. The inevitable shift in demographics causing wealth to be passed down to younger generations will require IFA businesses to adapt to the needs of younger clients. Those that grasp this and use technology to steal a march over competitors will no doubt see new opportunities for growth. In conclusion, there are threats and opportunities for IFA businesses in, perhaps, equal measure. Firms that are able to make key strategic decisions early and adapt to the changing demands of the profession, may have every opportunity to thrive. IFA business owners should start by undertaking a review of medium to long term business plans and consider the options open to them. Some form of disposal may be inevitable at some point in the future and the impact of a sale upon a business should not be underestimated. Advance planning should help to mitigate the impact and ensure a successful long term future for the business.

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Februar y 2020

DE FAQTO

PROTECTION:

HOW VALUABLE ARE ADDITIONAL SUPPORT SERVICES?

When it comes to the financial planning process, the value of extending the service to include protection policies can sometimes be overlooked by advisers. Ben Heffer, Insight Analyst - Life and Protection, at Defaqto, looks at the range of additional support services available with protection policies and reviews adviser attitudes to their value

y ensuring that unforeseen circumstances are considered and catered for as well as the more traditional investment considerations, advisers can ensure that clients are able to meet their goals in life regardless of certain events which may derail their plans. These days, more and more insurance providers are offering their policyholders (and their families) additional support services as part of their life and protection plans.

dig a little deeper and find out how each of these services sit with advisers. TABLE 1 Which of the following services do you think adds value to your clients? Claims support Second medical opinion service Mentel health counselling service Bereavement counselling service Virtual GP services Legal helpline Health and wellbeing services/app Discounted premiums for lifestyle improvements

Claims support services is the most favoured of the value-added services considered with 49% of advisers saying it adds real value

Gym discounts Discounted health MOTs Lifestyle coaching Debt and money management Nutrition advice 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Not important to my clients

Nice to have

Adds real value

Helps me sell more policies

Source: Defaqto Limited. N=275

In 2018, Aegonâ&#x20AC;&#x2122;s High Net Worth & Business Protection Report revealed that more than half of advisers (56%) feel that value-added services make clients more receptive to protection. In recent research by Defaqto, we attempted to

For the thirteen different value-added services shown in table 1, we asked advisers to categorise their opinions as to whether each one of the services is not important to clients, simply nice to have, adds real value, or helps them sell more policies.

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DE FAQTO

IT ADDS REAL VALUE AND HELPS ME SELL MORE POLICIES While an adviser might believe that a particular service has real value to the client, they may not feel it necessarily helps them sell more policies, although it is reasonable to assume that where the service helps with policy sales, the adviser also believes it adds real value too. Table 1 is therefore ordered on the aggregated response of these two categories. Claims support services is the most favoured of the value-added services considered with 49% of advisers saying it adds real value and 5% saying it helps them sell more policies. Claims support services also had the fewest number of advisers saying either it is not important (just 6%) or it is simply nice to have (39%). The second most valued service among advisers in this study is a second medical opinion service, which had the highest number of advisers saying that it helps them sell more policies (8%) and with 35% of advisers believing it adds real value. Mental health counselling service and bereavement counselling service are also favoured by advisers with 35% and 33% respectively believing that they add real value and 6% saying they help them sell more policies. Virtual GP services also received good support with 33% of advisers agreeing that the service adds real value and 7% contending that it helps them sell more. NOT IMPORTANT OR JUST NICE TO HAVE The ‘nice to have’ category is more of an ambivalent response and suggests that the adviser is primarily focused on the insurance element of a proposition. Such advisers may be underestimating the value that such services bring to their clients and are therefore not promoting them. As a result, their clients may not therefore be aware of the support services available. Those advisers opting for the ‘not important to my clients’ option again may be focused primarily on the insured benefits, but more likely have a client base for whom some of these services are perceived to be less important. For example, high net worth individuals may have no need of debt and money management help and may have access to other support services via private healthcare; similarly, older clients may have no interest in joining a gym or engaging with a health and wellbeing app. Those services which seem to find little favour with advisers are Lifestyle coaching, Debt and money management and Nutrition advice. These had the highest number of advisers declaring that they were unimportant to their clients. There was a diversification of support within the results for Gym discounts with a relatively large number of advisers

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Februar y 2020

saying it helps them sell more, but also with a significant number saying it is not important to their clients. This exposes perhaps the differences in client bases between those advisers promoting propositions such as Vitality and those with a more traditional client demographic. WHERE TO NOW? Many commentators predict and long for a nirvana where protection propositions have such a positive impact on people’s health and wellbeing that their likelihood of needing to claim within the term is significantly reduced. Indeed, reduced to the extent that the insured benefit becomes secondary to the support functions of the contract and the focus moves to the provision of health and wellbeing services rather than insurance. Already, the majority of providers offer one or more valueadded services as part of their life and protection contracts. According to Defaqto’s Engage database, 64% of providers offer claims support services – the intervention by trained professionals to help people deal with the consequences of a critical illness diagnosis or bereavement at the point of claim; 43% of providers offer health and wellbeing services – where similar interventions are available at all points during the term of the contract and which can head off problems at an early stage reducing the chances of needing to claim; and 51% offer a second medical opinion service. That support services add value to clients is of little doubt, the issue would appear to be one of positioning and promotion. For value-added services to become the main element of a protection contract, insurers must first provide these services for clients and their families from day one and establish an evidence base for reduced claims; second, distributors need to position the contracts with consumers with firm emphasis on the health and wellbeing benefits of the plan. Moving the value-added service from ‘nice to have’ to ‘adds real value’ is the order of the day.

About Ben Heffer Insight Analyst – Life & Protection at Defaqto

Februar y 2020

RICHARD HARVEY

DON’T LOOK BACK IN ANGER It’s only natural, says Richard Harvey, that parents want to support their offspring no matter what age they are. But, he warns, ignoring the pitfalls can be a recipe for disaster

f you have kids yourself, you will probably be very familiar with the request: “Dad (and/or Mum), can you lend me some money?”

Thereafter tends to come a specified a sum, either so modest you would be churlish to refuse, or so ambitious it will lead you to believe your offspring is purchasing industrial amounts of illegal substances. However, note the slippery word “lend”. Because there are not many parents of my acquaintance who ever

expects to see their money returned. It’s about as likely as Boris Johnson sending a ‘Good Luck On Your Retirement’ card to Jeremy Corbyn. THE BANK OF MUM AND DAD However, as advisers, I’m pretty sure that you will have had experience of one transaction which legions of parents willingly enter into which has potentially disastrous consequences of which they are entirely unaware. In a report to financial advisers, Alistair Nimmo, the marketing director at The Family Building Society, says that last year parents

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RICHARD HARVEY

are estimated to have lent or given £6.3bn to help their offspring onto the property ladder. The Bank of Mum and Dad, he says, is the UK’s sixth largest lender. In all too many cases, the fuzzily warm feelings felt by supportive parents handing over the cash to their offspring can turn icy cold when the fickle fist of fate punches them squarely in the mouth. Example: Your lovely daughter wants to borrow money for a deposit on a smart new flat she proposes to move into with Wayne, her beau-of-the-moment. Although you’ve always deemed him a feckless dreamer, you are consoled with the thought you will be lending the money to her, not him. Fast forward six months. She has discovered that far from looking for a job, Wayne spends his days slumped in front of the telly watching ‘Men And Motors’, while troughing the contents of the fridge and slopping Red Bull on the carpet.

In all too many cases, the fuzzily warm feelings felt by supportive parents handing over the cash to their offspring can turn icy cold when the fickle fist of fate punches them squarely in the mouth

Februar y 2020

She tells him to go. He won’t, and thus ensues a standoff. Although his name is not on the deeds, no tenancy agreement was ever drawn up. So Wayne sits tight, until he’s squeezed you for a lump of cash to leave. Alistair Nimmo cites several other examples of how loans from the Bank of Mum and Dad can go sour, even if the parents are the joint owners of the property. Take Tom. Mum lends him £50,000 to help him buy a property. They both agree that it is a loan, to be paid back as and when, although the mortgage lender specifies it was a gift from mother to son. Months later, Tom defaults on the mortgage, the lender takes possession of the property, and promptly flogs it. Mum is entitled to zero recompense, because no formal agreement was made specifying it was a loan. Worse still, she dies within seven years of Tom purchasing the property, meaning he is liable for up to £20,000 IHT on the money she ‘gifted’ him (which serves him right for letting his mother down). SAFETY FIRST There are legal and financial means for overcoming these potential landmines which, as advisers, you will be all too familiar with. Of course, many parents would baulk at the idea of presenting their offspring with contractual documents to sign – arguing that it’s hardly in the spirit of a loving family relationship. And what about those who for whatever reason will not take – or cannot afford – sound, professional financial or legal advice? So if you or a friendly solicitor know of someone who is about to ‘lend’ their son or daughter the wherewithal to buy their first property, offer them a little gentle advice. While the kids can blame you for all the faff of a legal agreement, you can take comfort that – in the immortal words of the late Jim ‘Bullseye’ Bowen – “yer money’s safe”.

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CAREER OPPORTUNITIES Position: Financial Adviser Job Ref: 56845 Location: SOUTHAMPTON Salary: £40000 - £50000 per annum This independent financial advisory practice provides leading advice to a diverse range of clients, all looking for the same unique experience. This is an exciting chance to join a firm with a great reputation and which prides itself on the level of advice it provides.

The opportunity: The firm is looking to take on a financial adviser to join the expanding team and provide outstanding service to their existing clients. In addition to a very competitive salary they also offer flexibility to work from home.

What’s needed for me to be considered? To be considered for the role candidates need to be: •

Level 4 Diploma qualified in Financial Planning with CAS

•

Experienced in working within a similar role

•

Able to demonstrate good technical and practical knowledge of the advice process

Position: Financial Adviser Job Ref: 57718 Location: WALTHAM CROSS Salary: £32000 - £38000 per annum This bespoke financial advisory practice also deals with discretionary fund management and is growing rapidly. They are a small team of highly qualified and experienced staff who provide a tailored service to their long-standing clients.

The opportunity: Due to business growth this practice is looking to welcome an experienced professional into the team, ideally a paraplanner looking to take the next step up. You will benefit from full back office support, exam support and progression opportunities into becoming a fully Independent financial adviser.

Skills: •

Qualified or working towards level 4 diploma is an advantage

•

Previous experience within an IFA practice and Paraplanning is essential

•

Excellent communication skills, both oral and written

•

FCA understanding of regulations and products, and their practical application

Position: Paraplanner Job Ref: 56269 Location: STANSTEAD Salary: £40000 - £45000 per annum This highly reputable and award winning Chartered Wealth Management firm has offices in London and surrounding areas. They provide effective investment management and financial planning for their clients.

The opportunity: They are looking to appoint a technically competent paraplanner to support the firm’s financial planners and transition into an advisory role. You will be heavily involved in the advice process and the role will involve attending client meetings as well as preparing advice letters, recommendations including income drawdown and investment reviews. You will have the opportunity to work in a supportive team environment with a great office atmosphere.

Skills: •

Level 4 Diploma qualified, ideally working towards Chartered status

•

Previous experience within a fast-paced IFA Practice

•

High level of analytical capability and good communication skills

•

Strong technical Pensions & Investment knowledge

•

Ability to work well with others

Position: Compliance Manager Job Ref: 57980 Location: HENLEY-ON-THAMES Salary: £35000 - £40000 per annum This is an established IFA practice which provides exemplary wealth advice to their clients.

The opportunity: The firm is looking for an experience compliance manager to oversee its day to day compliance function. Also available are longterm progression into a board-level position plus the potential to hold CF10/11 in the future. You will have the opportunity to work autonomously whilst working within a small team environment. You will be responsible for setting up and monitoring compliance processes alongside supporting the firm’s advisers relating to matters of FCA regulation.

What’s needed for me to be considered? In order to be considered, candidates ideally need to have; •

Experience in managing compliance within an IFA business, informing advisers on regulatory change and overseeing compliance processes

•

Ideally Level 4 qualified

•

Confident when communicating with board level directors

Position: Pensions Team Leader Job Ref: 58012 Location: LEICESTER Salary: £27000 - £33000 per annum A brilliant opportunity has arisen for a pensions team leader to join a well-established pensions provider which prides itself on maintaining long-lasting relationships with their business partners and clients by providing them with a professional, friendly and personalised service. You will be working within a friendly environment and provided with full support and encouragement to achieve your career goals.

The Role: •

Receiving instructions and ensuring that any task activity is accurately completed

•

Building and maintaining good relationships with clients, advisers and business partners

•

Informing clients and financial intermediaries of specific matters or issues affecting their schemes, especially actual or potential problems

•

Ensuring that client deadlines, all internally agreed key performance indicators, service standards and regulatory reporting requirements are met

•

Proactively identify risk within the department and escalate concerns to operations manager

•

Plan resources and manage timescales for ad hoc projects as well as the day to day running of the new business team

•

Motivate the team, create enthusiasm, be positive and approachable to all levels of staff

•

Identify improvements to internal processes/procedures and implement changes and improvements to these

Skills: •

Previous pensions experience

•

Management or experience of leading a team

•

Strong administrative skills

•

Ability to identify and process data

• Customer-focused •

Drive to continually improve your knowledge and skillset

•

Support all administrators on your team

M AGAZINE

Position: Paraplanning Manager Job Ref: 57840 Location: FAREHAM Salary: £50000 - £70000 per annum This successful financial services firm focuses on providing a high quality financial planning and investment management services to its valued clients, which has help build the sound reputation of the team built on over 100 years of combined experience.

The opportunity: •

Oversee and manage the paraplanning team

•

Act as customer relationship manager for the internal customer base – i.e. the financial adviser team

•

Drive improvements in efficiency, turnaround times and quality of the paraplanning output through engagement with IT, data management, the advisers and compliance

•

Agreeing, monitoring, managing and reporting on team KPIs

•

Co-ordinate, distribute, monitor and work on paraplanning projects and reports

•

Co-ordinate and manage any internal team problems and disciplinary matters in association with HR

•

Assist with the training and development of junior paraplanners

•

Willing to get involved in other projects within the business, which may occur from time to time, that fall within their capabilities

What’s needed for me to be considered? •

Relevant and extensive knowledge of financial planning and its function in the workplace

•

Provide a client-benefit driven focus, as well as an understanding of what makes for an efficient and happy team

•

Have completed industry related exams (Level 4 Diploma or better in regulated Financial Planning), or equivalent experience

•

Demonstrate experience of working with DFM solutions desirable

•

Have strong IT aptitude and believe in the power of automation of repetitive tasks; experience of Curo, FE Analytics and Voyant advantageous but not essential

Position: Paraplanner Job Ref: 57624 Location: AMERSHAM Salary: £30000 - £40000 per annum

A national wealth management practice which provides exceptional training and study support to sustain their Chartered status, seeks a techical paraplanner to support the financial planning team.

The opportunity: The firm has the flexibility to mould the perfect opportunity around each person’s specific skillset, so the role can be tailored to exactly what you want. You will have the opportunity to work in a supportive team environment where progression is strongly supported.

What’s needed for me to be considered? In order to be considered for this unique opportunity, candidates need to have •

Level 4 Diploma qualified or working towards

•

Previous experience within a fast-paced IFA practice

•

High level of analytical capability and good communication skills

Position: Financial Adviser Job Ref: 57887 Location: PRESTON Salary: £40000 - £45000 per annum A bespoke firm of independent financial planners is looking to expand by adding a new member to the financial planning team. Their main focus is on providing advice to HNW clients, ensuring all clients receive an exceptional level of service.

The opportunity: They seek an individual who has a professional and level-headed approach to come in and help provide advice to the clients generated through the firm’s lead source. This opportunity would be suitable for any Level 4 Diploma qualified professional, whether you be an existing IFA with a strong book of business, or a newly qualified adviser looking to work in a highly professional environment. The successful candidate will work with existing clients, whilst looking to develop and build a personal bank of clients, with all back office support needed to allow them to thrive.

What’s needed for me to be considered? •

Hold previous experience within an IFA / financial planning practice

•

Must be qualified to a minimum industry standard of Level 4 Diploma

•

Previous experience dealing with High Net Worth clients desirable but not essential

•

A strong understanding of pensions and investment products advantageous

Position: Financial Adviser Job Ref: 57160 Location: ORPINGTON Salary: £40000 - £50000 per annum The opportunity exists for a successful independent financial adviser to work within an established and successful firm which has offices in South East London. The firm deals in all areas of financial advice for HNW clients. Due to the retirement of a senior adviser, our client is looking for an experienced IFA to take over and develop their existing client bank of circa £45M FUM.

What’s needed for me to be considered? •

Level 4 Diploma qualified

•

Any Advanced (AF) qualifications are preferable

•

CF30 and achieved CAS

•

Proven track record of writing high levels of business year on year

•

Proven experience within a whole of market advisory business

What you will receive in return •

Competitive remuneration package

•

Full and comprehensive back office support

•

Client bank with c£45M FUM

Position: Financial Planner Job Ref: 57563 Location: DEDDINGTON Salary: £40000 - £60000 per annum The opportunity for a Financial Planner to join a firm of professional financial consultants based in North Oxford. The firm provides leading advice to a diverse range of clients, all looking for the same unique experience.

The opportunity: Due to business growth, our client is looking to take on a financial planner to assist a more experienced planner. The firm is looking for the candidate to show an eagerness to progress and build up the planner’s existing client bank. As a reputable firm, this business prides itself on the high level of advice it offers.

What’s needed for me to be considered? To be considered for the fantastic role as a financial planner, candidates need to be: •

Level 4 Diploma qualified in financial planning

•

Experience working within a similar role

•

Demonstrate extensive advising knowledge

Dan Gratton - Specialist Financial Planning Recruiter I have been recruiting within the financial planning field for just over 2 years now, largely specialising within the placement and recruitment of financial planners and senior back office roles. Prior to this, I was working in the industry for 5 years, as an Associate Financial Planner, so like to think I am somewhat knowledgeable on both the industry and those in it! A lot of people believe that the job hunt on the build up to Christmas can be quite slow, however we have found quite the opposite, with last December being our busiest month to date. It seems companies are very keen to get their recruitment needs in order, prior to the new year, so there may never be a better time for you to start your search. You will see below that we have a number of opportunities that we are working on at present and many more on our website should you be open to new opportunities. Furthermore, should you just wish for further information on the IFA job market at present, opportunities locally or industry information on qualifications etc, please do not hesitate to be in contact. You can reach me on 0117 922 1771 or feel free to email me at dan.gratton@heatrecruitment.co.uk.

What’s next? If you are interested in any of the above opportunities, please contact us directly. If suitable, one of our specialist consultants will be in contact with you to discuss the opportunity in detail prior to submitting your Curriculum Vitae to the client. During this discussion, we will aim to identify your specific skills and motivations and, where appropriate, can also recommend other relevant opportunities to you that match your requirements.

And finally… If these specific vacancies are not exactly what you are looking for, please contact us to discuss other opportunities we may be recruiting for that aren’t necessarily advertised.

BRISTOL OFFICE

LONDON OFFICE

+44 117 922 1771

+44 203 207 9075

Visit the Heat Recruitment website for more details of these and hundreds of other jobs too www.heatrecruitment.co.uk

NOV 19 / 403604

Responsible Investing | IFA 85 | February 2020

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