Adviser firm Lighthouse Group has unveiled a fact-finding process it claims matches client risk with suitable investments with new accuracy.
The company says it’s Client Risk Matching Initiative, immediately available to its advisers, partners its clients with an unfettered fund of funds with an asset mix designed to fit all risk profiles.
It says it does this after a psychometric fact-finding which is updated quarterly to “ensure the continued suitability” of the client’s investments.
Malcolm Streatfield, Lighthouse chief executive, says: “We are one of the first leading financial adviser groups to make this system available to IFAs, and is at the forefront of this advance in risk profiling.
“The process is extremely compliant and auditable. Using the fact finding process together with the unfettered fund of funds readily evidences that clients are being fairly and professionally treated.”
Lighthouse’s new fact-finding process, designed by Distribution Technology, uses “behavioural finance principles” to create a client risk rating.
The underlying investments are a range of unfettered fund of funds recently launched by F&C Management under the “Lifestyle” banner.
Lighthouse says it is the only offering of its kind currently available in the UK to provide an automated asset mix tailored to fit the risk profiles of specific categories of investor as determined by the fact finding process.
Within the asset allocation, the fund selection utilises the F&C multi-manager department under Richard Philbin and their in-house ”Traffic Light Analysis System”.
In addition, the performance of the funds will be monitored on a regular basis against agreed benchmarks by Andy Gadd, head of research at Lighthouse.
Gadd says: “Eventually even initially well constructed, balanced portfolios with the right asset allocation and a good choice of funds can drift over time into a shape that no longer meets that client’s objectives or risk profile.
“When combined with the need to monitor in excess of 2,200 authorised retail funds it is becoming increasingly difficult for advisers to ensure the initial suitability of fund choice and then the continued suitability for each client.”
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