Regular readers might recall that the boss ended last week’s update on this bombshell: “I’m on holiday next week, so will pick the feline I like least and have them do the Update”.

Oh. Right.

Fortunately, whilst Mark is away enjoying the Scottish Weather, there is plenty happening down here in the lang cat IOW HQ.  First up, a big thank you to everyone who completed our annual State of the Adviser Nation (SOTAN) survey. We’ve got over 550 responses from advisers/paraplanners/advice professionals to analyse, dissect and write up. We’ll start sharing the results with insight subscribers and everyone who took part before the year is up.

Elsewhere, I’m spending an increasing amount of my working day immersed in the exciting world of model portfolios. Hey, it’s a living. Anyway, last time out our SOTAN research showed that around 50% of advice firms are running their own models (on an advisory basis), with another 50% also outsourcing to a 3rd party DFM. As anyone who has ever completed a PROD segmentation exercise will know, advice firms could be doing both, and there are of course other investment solutions available. However, there is no getting away from the fact that for platforms and asset managers model portfolios are big business.

I reckon the world of model portfolios is about to get even more exciting, with some pretty significant change on the way. Three things are driving this, and here they are…

  1. PROPERTY FUNDS. The FCA consultation on new rules for property funds closes on 3rd November (more on that date later…). A policy statement with final rules is then expected in early 2021. As it stands, the proposal to introduce a notice period of something between 90 to 180 days makes many model portfolio propositions seriously unworkable. It is hard to see how a fund that requires individual investor notices to sell/rebalance can be held in a bulk model portfolio.
  2. VAT. As the boss highlighted last week, this is a biggie. Word on my street is that HMRC will shortly be clarifying the VAT-able position for Discretionary MPS services, and this could well result in significant work for DFMs, Platforms and Advisers. Loin-girding aplenty ahead for many.
  3. ESG. More of a slow burn this one, but if/when (and it is still if) the requirement for advisers to include the client’s ESG preferences as part of the suitability assessment are introduced, model portfolios will also need to evolve. I spent some time discussing this topic with Quilter Cheviot Investment Management on Monday. You can catch up with the webinar here. Early days, but I reckon a three-tier approach might (in this instance) make sense. Tier one for clients who indicate they don’t care about ESG factors – you get a “normal” portfolio. Tier two, where it is important but not the most important factor – a portfolio with set ESG criteria and reporting. Tier three, where ESG is the most important thing – a portfolio with negative and positive screening applied. Tiers one and two can be delivered using model portfolios, but tier three will need to be bespoke to each client’s views.

What does this all mean? Well, whilst ESG might be a slow burn, the other two points are about to hit anyone involved in manufacturing or distributing model portfolios. It’s never been more important to keep abreast of what is happening, how the market is evolving and what your peers are doing. Fortunately, over 550 advice professionals and all our Insight subscribers will be getting some nice fresh research over the coming weeks to help them with all of this. What a time to be alive.


  • 3rd November is not only the closing date for the property fund consultation, but it is also the US election. Lots of articles starting to appear saying what it will mean for investors. Here is why you should ignore them….
  • As one (big) survey closes, we still have another one open. This time we want you to rate the platforms for service, support and the system itself. Advice professionals only please.
  • Steve is on HomeGames duty this week. He’ll be joined by one of the most opinionated (in a good way) and passionate financial planners around, Darren Cooke. Watch live at 12:30pm, or catch up on Youtube at your leisure.
  • And to close, sadly this is another week where the musical link is an artist who we have recently lost. Jose Padilla created and defined a sound, with legendary sunset sessions at Ibiza’s Café Del Mar. Sit back, pour a drink, and enjoy.

My favourite lang cat will be back next week. See you the next time.