But there is also one last piece of guidance to hold on to from the FCA. The regulator expects whole-of-market due diligence, but at the same time it has added a pinch of realism.
With regards to due diligence, it says: “Without completing this necessary step, firms cannot assure themselves that the Cip is likely to be suitable for their clients and therefore should not adopt the Cip”.
This could mean that robust and relevant due diligence does need to be undertaken on a regular basis. If any firms are unwilling or unable to provide the requested information, it is reasonable to move on as there are many more that will.
Finally, once all information has been gathered and analysed, it is vitally important that engagement with the firm is undertaken, preferably on a face-to-face basis. Test your findings, ask for more and see what its service to you, the adviser, is going to be like.
The chances are – assuming good, initial due diligence – significant amounts of client monies will be invested with the DFM over a number of years, so the personal relationships start to become as important as the contractual ones.
Fraser Donaldson is insight analyst, investments, at Defaqto
