The Financial Services Authority's (FSA) proposal to ban the promotion of unregulated collective investment schemes (UCIS) to retail investors is the one move it has made which is likely to actually save people money, according to wealth manager Courtiers.
In a consultation paper published in August, the regulator said it wants the promotion of UCIS to be generally restricted to 'sophisticated' investors and high net worth individuals for whom the products are more likely to be suitable.
Current rules allow UCIS to be promoted to ordinary retail investors if an adviser first assesses the product's suitability. However, the FSA said its own review suggested only one in every four advised sales of UCIS to retail customers was suitable, taking into account the customer's needs and requirements.
Gary Reynolds, chief investment officer at Courtiers, said the opportunities offered up by UCIS are often worthless by the time they reach retail investors, because the good products had usually been taken by wealthier investors.
"Good investment opportunities are plucked off high up the chain, not by lower-down retail investors. You need millions to invest in these sort of things.
"The banning of UCIS is probably the one thing the FSA is doing which will actually save people money. We don't like UCIS at all. How do you measure the risks? A few years ago we decided we would be more robust in our refusals of these for clients.
"If you want risk, mortgage your house and stick the money in equities."
Courtiers' 12 advisers build relationships with clients - who have an average portfolio of £385,000 -, carry out fact finds and suitability reports, before handing over the choosing of investment products to the firm's investment team.
"It's our way of controlling the risk," said Reynolds. "Advisers can't just mix and match from a panel. The assets chosen have to be stress tested against macro events with the other assets in the portfolio to ensure the risk equates to clients' risk profile.
"It gives us a better chance of keeping rubbish out of the portfolio."
Courtiers is currently on the acquisition trail, and has taken over five companies since 2008.
"We're looking to buy more companies and transition their clients over to Courtiers as part of advisers' retirement plans," said Reynolds.
The firm is also looking to take on individual advisers, and tends to punt for the younger breed.
"Taking on someone with 30 years' experience and retraining them is near impossible. We haven't got a single adviser we've taken on that is over 40. We take people on from bigger insurers, bring them in and help them complete their exams and train them as Courtiers advisers."
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