Financial Advisers

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Due Diligence in Practice

Once the needs of the firm and of its clients have been reviewed and articulated, the traditional approach to due diligence has meant hours are spent formulating questions to be asked of potential investment managers. With no starting point this process can be very taxing.

Often industry 'standard' questionnaires don't cover the areas that may be of interest to a particular adviser firm, so questions are patched together from various sources. This causes several problems.

Investment managers will often try to insist on the adviser using their pro-forma due diligence document, but this makes life difficult for the adviser. The document may not address the points the adviser is concerned about and, in order to compare responses from different firms, the adviser must deconstruct the answers and put them into a common format for easy comparison and assessment.

From the investment managers view a questionnaire made up of slightly changed questions takes a great deal of time to complete. Unfortunately, this can lead to the questions being answered in a less than optimum way and delays often making the more efficient investment managers data out of date before the process is finished.

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The Practical Solution

DD|hub provides a practical framework for advisers to use in the due diligence part of their investment manager selection. We do not force you to use a standardised questionnaire nor do we have a proprietary selection process that we make you use.

You can:

  • Select the topics of most interest to you and your clients, from over 300 due diligence questions
  • Choose from a wide range of investment managers
  • Obtain instant responses
  • Output the results in a format that makes reviewing the data easy
  • Use a scoring system to keep track of your thoughts
  • Review and save your scorecard
  • Track any changes to the due diligence information at investment managers
  • Store your data online for easy retrieval
  • Set a review date.

DD|hub is a tool to help reinforce your due diligence process.

Register now for free access to DD|hub now for your business - or contact us on 020 3633 2185 or info@ddhub.co.uk for more information.

Regulatory Context

Research and due diligence is a hot topic.

The FCA have set out their expectations of the investigations they expect advisers to undertake in selecting an investment manager, and reinforced it in the Thematic Review paper TR16/1 - published in February 2016.

It refers advisers back to the core requirements set out in paragraph 1.2.4 of the Responsibilities or Providers and Distributors for the Fair Treatment of Customers (RPPD), with:

  • Research - required to assess the nature of the investment and its risks and benefits
  • Due diligence on the provider, to establish whether they believe it appropriate to entrust the provider with the client's assets.

The FCA says that the advisory firm needs to understand these factors in order to judge whether the solution is suitable and that, once advisers have understood the nature of the investments and the individual product or service, they should be able to judge for each client whether the product is suitable.

Register now for free access to DD|hub now for your business - or contact us on 020 3633 2185 or info@ddhub.co.uk for more information.