The fundamental definition of risk being lost in translation in the investment process remains very real following this month’s Money Marketing survey results.

Risk profiling a client, and subsequently recommending investments that employ different definitions of risk, is problematic. The issue lies in mis aligning the recommendation to the client’s needs and desires, leading to future regulatory sanction and client redress.

More than 10 per cent of advisers from more than 260 surveyed by Money Marketing on 1 November said that they used one company for the risk profiler and a different one for the risk-targeted funds. Eight per cent, or one in 10, said they had no standard process for measuring a client’s attitude to or capacity for risk prior to that. I suspect they may have been the same people, but we didn’t get to see that level of granularity.

Our CEO Ben Goss, commenting on this month’s survey findings, told Money Marketing, “The FCA wants people comparing apples and apples. It doesn’t matter what tool, it should be the same for the investment and the investor. The FCA might look at that eight per cent and ask questions.”

62 per cent of advisers surveyed said that they bore the main responsibility for ensuring investments remained in line with the client’s risk profile and agreed mandate. 22 per cent, in comparison, felt asset managers shouldered that fundamental burden.

It is perhaps not surprising then that advisers have increasingly recommended Risk Target Managed (RTM) solutions in Dynamic Planner in the last 12 months. New figures out in October 2018 revealed that RTM recommendations were up 15 per cent year-on-year compared to October 2017 data. The recommendation of Premium and Select-rated funds in Dynamic Planner also increased, 30% year-on-year. It makes sense that if you use the underlying assumptions in Dynamic Planner to risk profile your client, you’ll use the same assumptions for the asset allocation and recommendations. Nothing will be lost in translation.

Premium and Select-rated funds highlight investments with strong five and three-year performance, respectively. When it came to choosing an RTM solution in the Money Marketing survey, advisers underlined that returns delivered for the risk taken after charges was the most important attribute, closely followed by staying within the risk boundaries over a given period. When advisers were asked what were the key benefits of RTM funds, ensuring ongoing suitability ranked first followed by managing client expectations. All things we hear time and time again from Dynamic Planners.

The 6,500 advisers and paraplanners who use Dynamic Planner select from more than 120 RTM solutions and Dynamic Planner RTM funds under management have grown rapidly from £1.6bn in 2013 to £6.7bn in 2018, or 320 per cent. We are proud to be spearheading this change.

Ben Goss told Money Marketing, “Data on risk-targeted solutions shows the area is expanding. It goes back to the FCA’s question of how you ensure good value for money. Advisers are receiving the message and engaging with clients to get them to understand it’s about assessing the return for the risk being taken. Investment and investor just have to be aligned; we’ve seen that in the Financial Advice Market Review.”

“It’s difficult to argue that with professional targeting you are not going to get a good outcome. But blending risk-target solutions could be a bit self-defeating. Managers are taking particular allocations and tactical decisions based on their own view of risk. As long as these decisions are made within the risk profile, they are not necessarily visible to advisers.”

Dynamic Planner was founded in 2003 and is the UK’s most popular risk profiling and asset allocation investment process. It helps you and your firm ensure your clients’ investment suitability, increase efficiency and demonstrate value. Crucially it ensures nothing is lost in translation between risk profiling a client, building a risk-based financial plan, creating an asset allocation-based investment strategy and recommending suitable investments. All that translates into suitable, compliant outcomes both for you and for your clients. Learn more.

Wednesday saw the most exciting event ever held by the award-winning provider of risk profiling and asset allocation experts Dynamic Planner, at the IET in Savoy Place in London. The day was filled with controversial yet inspirational conversation, stacked with industry insight as well as macroeconomic expertise.

Advisers and paraplanners from all over the UK gathered with asset managers, platform providers, VIPs and speakers to learn the very latest in the world of investment. Simon Jack, the BBC’s Business Editor fresh from Davos, trotted us through the day with entertaining insight and mastery. Jack tells us French President Macron was the star of the Swiss slopes, and Brexit wows may be dampened by the prospect of global growth in 2018. The stage was set for a serious day.

Up next were five heavyweight CIOs from some of the UK’s top asset management houses. We heard that the giant global quantitative easing will continue to run, and we’re currently amassing pools of bonds normally associated with the latter part of wartime. The top-class debate had the CIOs agreeing that 2018 is the ‘year for portfolio housekeeping’ and advisers need to let investors know bull markets have to come to an end eventually, so make sure the risks are made clear. On cryptocurrency, this was said, ‘It’s yesterday’s story already, it’s not an investment’.

The Dragons’ Den session fired up the audience and pitches came in fast and hard from the Dynamic Planner team, with the Review Reports pitch winning over Charting and Investment Suitability Indices. The audience was delighted to hear that Dynamic Planner is taking the audience’s steer and developing the winning pitch into the product.

Updates to the Dynamic Planner risk profiler and the launch of a new questionnaire was delivered, arguably one of the most fiercely listened to addresses of the day. The remainder of the afternoon was seen through by some top-class keynotes spanning sport, politics and investment, all culminating in a quality panel debate with Dynamic Planner CEO Ben Goss, former General Secretary to the Premier League Nic Coward, Alastair Campbell, Tony Blair’s speechwriter and Simon Jack, the BBC’s Business Editor.

Firmly positioned as one the investment industry’s best events, the Dynamic Planner 6th Annual Conference has received critical acclaim by both the attendees and the wider community alike, and is set to be the must-attend conference in our industry’s calendar.



Yasmina Siadatan

Head of Marketing