Philippa Gee: Quick-fix centralised investment processes could hurt everyone


It would be fair to say that centralised investment processes are receiving a fair amount of attention at the moment, from advisers, press and the regulator.

I can see that this is no bad thing and that based upon some of the investments arranged by certain advisers in the past, a more controlled strategy has considerable advantages. I only have to think of some of the examples I have seen; the ultra low risk investor who had a bank adviser recommend they place 100 per cent of their one and only pension fund into a European Smaller Companies fund, or the adviser from another firm who recommended every client place 100 per cent of their investible assets into a particular commercial property fund.

But does having a centralised investment process mean you are automatically doing the right thing?

Yes it gives transparency, allowing those who specialise in investments to use their expertise for the benefit of the firm’s clients and it gives much needed greater control. However, when I came across a firm who have produced their centralised investment process in the space of 40 minutes – and were proud of that – I started to worry.

The issue there is that they recognised the need for the process but had no inclination to organise it themselves, so a product provider came along, offered to do it for them (low and behold that provider also has a platform, which will hold the assets) and you get a brand new (or perhaps not) process.

So is this a problem? Well I admit that it always grates with me when product providers get too involved with an IFA business, as in my view the roles should be clearly separate. However my main concern at this point is the client and whether this is really best for them, as I don’t think it can be.

My worry is that in the pursuit of a centralised investment process, the quick solution of a provider-sponsored process will present longer-term headaches for the client and, as a result, with FSCS levies, it could be a problem for us all.

Philippa Gee is managing director at Philippa Gee Wealth Management