Industry Voice: Drilling into solutions

clock • 3 min read

Gillian Hepburn, Intermediary Solutions Director, Schroders

I recently bought a drill -honest! It reminded me of the old adage that generally people buy one not because they want a drill but they need a hole in a wall. The drill is simply the solution to a problem they have such as how to hang a picture or fix a shelf.

In the asset management industry we often refer to delivering ‘solutions,' it's even in my job title! But what are the holes in the wall that we are helping to address and how do these solutions help both financial advisers and their clients?

For me, the introduction of the PROD regulations as part of MiFID II provides a good example of where investment solutions can help with problems and challenges.

Back in 2012[1], the regulator suggested that an adviser firm may wish to ‘consider segmenting its clients'. This was helpful advice until 2018[2] when the regulator stated that ‘the target market needs to be defined at a sufficiently granular level' and that adequate product governance needs to be in place to ensure that ‘financial instruments and investment services are compatible with the needs, characteristics and objectives of the target market'.   

This statement takes client segmentation to a new level - no more ‘gold, silver and bronze' segments which in reality has largely disappeared. Client segments must now reflect the individual needs of different types of client and this must be evidenced and documented.

As a consequence, segmentation has now moved from level of wealth to also focus on lifestage. However there is a third dimension which is leading to production of sub-segments. If we consider post retirement as an example segment, not every ‘retired' client requires income from their pension and some may aspire to pass on their pension pot to the next generation. Solutions for this segment therefore require a range of options including protection of capital, growth and income. Some clients may also require ESG investment, low cost strategies or passive investments that are aligned to their attitude to risk and capacity for loss. These requirements can be delivered in a number of ways such as multi-asset funds, platform model portfolios or bespoke portfolios.

Investment solutions are essentially tools and like ‘drill bits' they can solve a range of challenges ensuring that adviser problems are addressed and importantly that client outcomes can be met.  

Visit www.schroders.co.uk/outsourcing to find out more about our range of multi-asset solutions or alternatively watch the video below.

 

 

 

Important information

Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Schroders has expressed its own views and opinions which may change. 

This information is not an offer, solicitation or recommendation to buy or sell any financial instrument or to adopt any investment strategy. Nothing in this material should be construed as advice or a recommendation to buy or sell. Reliance should not be placed on any views or information in the material when taking individual investment and/or strategic decisions. No responsibility can be accepted for error of fact or opinion. Issued by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU, registered No. 1893220, who is authorised and regulated by the Financial Conduct Authority. 



[1] Assessing suitability: Replacement business and Centralised Investment propositions, July 2012

[2] Product Intervention and Governance Source Book (PROD), FCA January 2018

In-depth

March 2024: Month in review with deputy editor Jenna Brown

March 2024: Month in review with deputy editor Jenna Brown

Take a look at some of the news and feature highlights of the last month

Jenna Brown
clock 28 March 2024 • 5 min read
Will IFA-owned platforms take over the financial advice sector?

Will IFA-owned platforms take over the financial advice sector?

PA talks to industry experts on the future of adviser-owned platforms

Sahar Nazir
clock 27 March 2024 • 9 min read
PA Awards 2024: Winners' photo gallery from the night!

PA Awards 2024: Winners' photo gallery from the night!

The industry's best were celebrated in London last Wednesday

Professional Adviser
clock 26 March 2024 • 1 min read