WEALTHSELECT - Old Mutual Wealth...quantitative inputs, including each manager’s risk profile,...

For Financial Advisers only

WEALTHSELECT MANAGED PORTFOLIO SERVICE Due diligence responses

WealthSelect Managed Portfolio Service - Due diligence responses

DUE DILIGENCE MADE EASY We know that choosing an investment service and creating a due diligence report to evidence its suitability can seem like a complex and time-consuming task. To make this as easy as possible for you, we have collated all of the questions we are frequently asked by advisers in their due diligence questionnaires, and listed them with the answers in this document.This document, which should be read in conjunction with our platform due diligence responses document, covers the key areas to focus on inline with the FCA’s high-level guidelines for advisers.

WHAT ARE THE FCA’S DUE DILIGENCE GUIDELINES?The FCA has published high-level due diligence guidelines for advisers in a thematic review paper.

TR16/1: Assessing suitability: Research and due diligence of products and services

https://www.fca.org.uk/your-fca/documents/thematic-reviews/tr16-1

We have outlined the key areas that we think advisers should take into account when considering the suitability of a third party investment management company. These areas are:

– Organisation details

– Investment service overview

– Investment process

– Functionality

– Risk management and monitoring

– Suitability and target market

– Charges

– Accessibility

1. ORGANISATION DETAILS1.1 Background1.1.1 Old Mutual Wealth

Old Mutual Wealth is part of Quilter, a leading provider of advice, investments and wealth management both in the UK and internationally, managing £118.4 billion of investments on behalf of over 900,000 customers (as at 30 June 2019). Quilter plc is our group holding company and it listed on the London and Johannesburg stock exchanges on 25 June 2018.

For further information on the Old Mutual Wealth UK platform, please see the ‘Old Mutual Wealth’s Platform Due Diligence Responses’ document.

2



https://www.oldmutualwealth.co.uk/globalassets/documents/literature-library/platform/due-diligence/omw_old_mutual_wealths_platform_due_diligence_responses.pdf


1.1.2 Quilter Investors

Quilter Investors are trusted to manage £20bn (as at 30 June 2019) of assets on behalf of investors.

Quilter Investors is the Authorised Corporate Director (ACD) for all of the funds managed by our Global Partners and is obliged to ensure the managers appointed to run the funds are suitable individuals and capable of being able to deliver to the funds’ objectives.

Quilter Investors is responsible for the regulatory oversight of the funds, which involves:

– Monitoring the sub-advised funds to ensure the manager adheres to the guidelines within the mandate and is aligned to the originally intended design.

– Ensuring receipt of annual due diligence questionnaires from each sub-adviser group.

– Measuring fund performance against mandate targets on a quarterly basis

1.2 Legal details1.2.1 Full legal name of the contracting entity

For CIA and ISA contracts, the provider is Old Mutual Wealth Limited (OMWL). For CIB and CRA contracts, the provider is Old Mutual Wealth Life & Pensions Limited (OMWLP). They both hold FCA permissions to ‘manage investments’ and are therefore able to offer the Managed Portfolio Service either as a direct contractual option (CRA/CIB) or as an additional service (CIA/ISA).

1.3 Personnel and roles1.3.1 Key investment professionals involved in the management of Managed Portfolio Service

Stuart Clark

Stuart is the portfolio manager and has responsibility for managing the WealthSelect Managed Portfolio Service. He is accountable for all portfolio management decisions, and for leading the research supporting the funds used within the service. Prior to joining Quilter Investors, Stuart was an Executive Director at Julius Baer, responsible for mutual fund due diligence and has held similar roles at Merrill Lynch Wealth Management, UBS, and BDO Investment Management. Stuart is a CFA Charter holder.

Quilter Investors investment team

The portfolio manager is supported by the Quilter Investors investment team. The investment team at Quilter Investors has extensive experience in managing multi-asset funds, and includes 7 portfolio managers and 28 other investment professionals.

The team’s key responsibilities include:

– Qualitative fund manager research

– Quantitative fund manager analysis

– Portfolio management including:

– manager selection

– asset allocation

– rebalancing

– monitoring

The portfolio manager is a CF30 (Customer Function enabling them to advise on and arrange investments) to enable them to undertake the management of the portfolios. In addition, members of the Quilter Investors investment team will undertake the ongoing research and monitoring of the funds and decide the appropriate composition and any changes that need to be made.

3


2. INVESTMENT SERVICE OVERVIEW2.1 WealthSelect Managed Portfolio Service Our Managed Portfolio Service provides a convenient and complete investment solution that enables you to outsource the asset allocation, manager selection and day-to-day running of your clients’ portfolios all for a very competitive cost.

You can select a portfolio based on two factors:

Two different investment approaches

– Active – Blend

Eight different risk levels

– Risk Level 3 to 10

2.2 Global Partners Each portfolio invests in a combination of funds from our Global Partners bringing together the industry’s leading fund managers and best known asset management brands across all the major asset classes at a very competitive cost.

The fund managers in the range have been selected from 16 market-leading fund groups and are regularly monitored to ensure they perform as expected and continue to meet our high standards.

For further information, please see ‘Guide to our Global Partners’.

2.3 Funds The majority of the funds used within the portfolios are sub-advised mandates. The management of the mandates is outsourced to our Global Partners. The below list shows the current funds available for use within the portfolios:

2.3.1 Sub-advised mandates

Quilter Investors Absolute Return Bond (Janus Henderson)

Quilter Investors Asia Pacific (ex Japan) Equity (Fidelity)

Quilter Investors Asia Pacific (ex Japan) Large-Cap Equity (Invesco)

Quilter Investors Asia Pacific (Merian)

Quilter Investors China Equity (Janus Henderson)

Quilter Investors Corporate Bond (Merian)

Quilter Investors Diversified Bond (Merian)

Quilter Investors Emerging Markets Bond (Merian)

Quilter Investors Emerging Markets Equity (Merian)

Quilter Investors Emerging Markets Equity Growth (JP Morgan)

Quilter Investors Emerging Markets Equity Income (Wells Fargo)

Quilter Investors Europe (ex UK) Equity (Janus Henderson)

Quilter Investors Europe (ex UK) Equity Growth (Columbia Threadneedle)

Quilter Investors Europe (ex UK) Equity Income (Schroders)

Quilter Investors Europe (ex UK) Small/Mid-Cap Equity (Merian)

Quilter Investors Gilt Index (BlackRock)

Quilter Investors Global Equity Absolute Return (Merian)

Quilter Investors Global Equity Growth (Fidelity)

Quilter Investors Global Equity Index (BlackRock)

Quilter Investors Global Equity Value (Newton)

Quilter Investors High Yield Bond (Columbia Threadneedle)

Quilter Investors Investment Grade Corporate Bond (Invesco)

Quilter Investors Japanese Equity (Schroders)

Quilter Investors Natural Resources Equity (Janus Henderson)

Quilter Investors North American Equity (Merian)

4

https://www.oldmutualwealth.co.uk/globalassets/documents/literature-library/platform/wealthselect/18368-global-partners-brochure.pdf


Quilter Investors Precious Metals Equity (BlackRock)

Quilter Investors Sterling Corporate Bond (Fidelity)

Quilter Investors Sterling Diversified Bond (Fidelity)

Quilter Investors UK Equity (Merian)

Quilter Investors UK Equity Growth (Newton)

Quilter Investors UK Equity Income (Merian)

Quilter Investors UK Equity Index (BlackRock)

Quilter Investors UK Equity Large-Cap Income (Artemis)

Quilter Investors UK Equity Large-Cap Value (Newton)

Quilter Investors UK Equity Opportunities (Artemis)

Quilter Investors US Equity Growth (JP Morgan)

Quilter Investors US Equity Income (Mellon)

Quilter Investors US Equity Small/Mid-Cap (Schroders)

The investment adviser group is shown in brackets.

2.3.2 Direct funds

BlackRock Cash

Janus Henderson UK Property

PIMCO Dynamic Bond

3. INVESTMENT PROCESS3.1. Investment philosophy It is fundamental that the investment solution provided to your client matches their needs. We believe that achieving the optimal investment returns for clients is a function of skill, opportunity set and execution:

– Skill: our experience and resources – internal and external, experience in manager selection

– Opportunity set: working with a limited range of leading fund groups/managers enables us to drive down costs without compromising on quality.

– Execution: we use our buying power and ability to package solutions via sub-advised mandates to deliver leading investment solutions to clients at very competitive prices.

5


3.2. Portfolio construction3.2.1. Fund selection

The Managed Portfolios are constructed from funds from our Global Partners. Portfolios are constructed using an appropriate combination of funds to ensure compatibility with the client’s attitude to risk. Active management means portfolios are subject to ongoing monitoring and research to ensure they continue to perform as we’d expect, within each risk-targeted level.

3.2.2 Manager selection

Our approach focuses on gaining a qualitative understanding of a fund manager’s capabilities, supported by quantitative evidence gathering.

This framework helps ensure our process is both disciplined and consistent. The process is a continual one in which managers are researched, selected and monitored on an ongoing basis. Key inputs to this process include face-to-face meetings with managers and in-depth portfolio analysis. The weightings allocated to each manager within our portfolios are derived from a combination of qualitative and quantitative inputs, including managers’ risk profile, investment approach and style, and total portfolio fit. We monitor all positions on a continuous basis, paying close attention to the interaction between managers to ensure the overall portfolio retains the desired characteristics.

The weightings allocated to each manager are derived from a combination of qualitative and quantitative inputs, including each manager’s risk profile, investment approach and style, and total portfolio fit. We monitor all positions on a continuous basis, paying close attention to the interaction between managers to ensure the overall portfolio retains the desired characteristics.

3.2.3 Investment research

The Quilter Investors Fund Research team identifies strong strategies from each of our Global Partners that may be suitable as sub-advised mandates as part of an overall multi-asset offering. As part of this process, the team will consider a manager’s philosophy, process, people, and performance.

The team of ten analysts undertake over 17,000 hours of fund research every year using a number of analytical applications and proprietary tools and models when validating and assessing current managers, and screening for new ones.

However, nothing can replace the face-to-face contact and the 1000+ meetings conducted every year, which remain integral to the process of adding new strategies and monitoring those already covered.

Exhaustive research will continue to be undertaken before approving a new strategy for investment – just as the Fund Research team will continue to conduct regular meetings with existing managers to ensure the initial rationale for holding the investment is still valid.

3.3. Asset allocation3.3.1. Strategic

Our Managed Portfolios use a disciplined, long-term, strategic asset allocation approach designed to maximise the potential return for an expected level of risk. They provide access to a broad range of assets, including not only equities, bonds and cash, but also commercial property and other specialist investment opportunities. They are designed to offer diversification at multiple levels, investing across global markets, both developed and emerging, and via managers with different styles and approaches.

Our portfolio managers combine inputs from Willis Towers Watson (WTW), industry-leading providers of asset allocation research, with our own in-house research to build the optimal portfolios. The process is structured but also allows the portfolio managers discretion to manage the portfolios as they believe is appropriate to achieve the best outcome for the investors, in line with the objectives of the individual portfolios.

3.3.2 Tactical

The long-term, strategic asset allocation is the starting point for portfolio construction.

The team are constantly assessing economic conditions, reading research, and meeting managers. Views are formed from discussions within the team (analysts, other portfolio manager, and economists) and various external resources. The portfolio manager has the final decision on positioning which reflects his interpretation of the current environment.

This process is used as an input for deciding on areas where they want to be overweight or underweight at the headline asset class - Cash, Alternatives, Fixed Interest, UK Equity, Developed Markets Equity (ex UK), and Emerging Markets Equity. At this point the team reverse the output for each risk level and product to ensure that the portfolio will sit within the ascribed volatility band for that particular risk level. If it does not then they adjust the TAA until it is in the range.

6


The team then use the same sources of information to form a view as to which sub-asset classes they want to be overweight, (e.g. underweight gilt/overweight credit) which is relative to the inputs used in the WTW model, assimilate all these views, which provides the latest TAA.

Finally, the team will also further tilt the portfolios through the manager selection and blending process if they have a particular view on market cap size, style, beta, etc.

3.4. Performance measurement3.4.1. Benchmarks/Indices

The Managed Portfolio Service does not have benchmarks. All our portfolios aim to perform with a specific level of risk, measured as volatility, on an ongoing basis. We believe a risk-targeted approach gives clients a much clearer idea of what your client can expect from their investments than the risk-rated approach adopted by many of our competitors, which tends to select funds by assessing their risk based on past performance and so gives investors little certainty that this level of risk is going to remain in the future.

4. FUNCTIONALITY4.1 Rebalancing4.1.1. Frequency

All the portfolios are rebalanced quarterly.

4.1.2. Portfolio Drift

Intra-quarter the clients’ portfolios will be allowed to drift from the model portfolio in line with the performance of the underlying holdings. The drift will be closely monitored by the portfolio management team and if it is prudent to rebalance the portfolios back to target then they will do so if the market conditions are right. In normal market conditions turnover of the portfolio will be low. Following the quarterly asset allocation update, all client portfolios will be brought back in line with the updated model portfolio.

4.1.3. Intra-Quarter Trading

It is not envisaged that the portfolios will be repositioned between rebalancing dates, but the portfolio manager has full discretion to rebalance whenever he deems necessary. Exceptional events, such as manager departure, may lead to a repositioning.

4.2 Payment of fees The functionality of Old Mutual Wealth means that we do not require a cash account for trading of assets, payment of fees, or our Managed Portfolio Service. Fees and charges are taken via unit deduction proportionately across all funds.

7


5. RISK MANAGEMENT AND MONITORING5.1 Corporate governance5.1.1. Old Mutual Wealth Limited (OMWL) Board

Global Partners and the Managed Portfolio Service are formally overseen by the Old Mutual Wealth Limited (OMWL) Board. The Board of Directors meet six times a year, with a number of ad hoc meetings or calls throughout the year.

The Managed Portfolio Service is overseen by the OMWL and OMWLP Investment Committee which is responsible for the oversight of the WealthSelect managed portfolio service.

5.1.2. Old Mutual Wealth Investment Oversight Council

In addition both Global Partners and Managed Portfolio Service are overseen by Old Mutual Wealth’s Investment Oversight Council (IOC), which comprises a member of the Old Mutual Wealth Executive Management Team, Old Mutual Wealth’s Head of Product, and two independent external advisers.

We have established the IOC with a remit to review and offer guidance/challenge on the management of the portfolios and the range itself, and to manage any conflicts of interest.

They advise and make recommendations to the Investment Committee in respect of the following:

– The investment solutions are performing as intended

– The investment decision-making processes are robust

– Appropriate risk management is in place

– Any conflicts of interest are managed.

The Investment Committee provides the oversight and governance as sub-committee of the OMWL and OMWLP boards. The chart overleaf shows the different levels of governance.

5.1.3 Quilter Investors Global Partners Forum

The Global Partners Forum is the delegated body specifically responsible for the oversight and monitoring of our Global Partners and the funds from which the managed portfolios can be constructed. They are tasked with taking appropriate action to deliver good outcomes for your clients.

They decide the number and type of mandates to ensure there is appropriate coverage for the construction of multi-asset portfolios. The addition of new sub-advised mandates is based on the identification of a clear investment/customer need.

The Global Partners Forum consists of representatives from across Quilter Investors including the portfolio managers of the WealthSelect and Creation portfolios; the Head of Investments, the Head of Product; the Chief Commercial Officer; the Head of Strategic Partners, and the Head of the Fund Research team.

The objective of the Global Partners Forum is to provide a governance structure that ensures:

– The funds consist of high quality fund groups, managers, and strategies.

– The funds remain appropriate for the portfolio managers so they can build robust investment solutions offering good customer outcomes.

– The Fund Research team’s views are considered and decisions are made promptly regarding the constituent funds and managers.

– The feedback from portfolio managers regarding their ongoing requirements can be received and direction provided to the Fund Research team and the Head of Strategic Partners on how their needs may be supported.

8


Old Mutual Wealth Investment Oversight Council (including two independent external parties)

Old Mutual Wealth Limited (OMWL) Board

OMWL and OMWLP Investment Committee

Portfolio Managers (Quilter Investors)

Platform OMWL MPS Provider

Client Adviser

OMWLP Product Provider

Client

CIA/ISAAdvice Agreement

CIB/CRA

OMWL CF30s OMWLP CF30s

CIA/ISA Terms = Retail Client

CIA/ISA Terms = Professional Client

Product Terms and MPS: Retail Client

Advice Agreement

9


6. SUITABILITY AND TARGET MARKET6.1 SuitabilityThe FCA Thematic Review TR 15/12 (Wealth management firms and private banks: Suitability of investment portfolios) confirms that firms providing discretionary and advisory portfolio management services to retail customers must ensure that they can demonstrate that their customer portfolios are suitable.

The WealthSelect Managed Portfolio Service is designed with client suitability at its core. This is evidenced through:

– Clear and unambiguous objectives: we offer risk-targeted solutions that can be closely matched to individuals’ risk profiles on an ongoing basis. A risk-targeted approach gives investors much greater clarity from the outset about the kind of investment journey they can expect, as compared to a risk-rated approach, which uses past performance to assess fund risk, giving the investor little certainty that this level of risk is going to remain the same in the future.

– Value for money: we offer a fully outsourced, actively managed solution at a very competitive rate; fund costs are low and there is no added investment management fee. Our size and scale gives us significant buying power in the market and by working with a limited number of leading fund groups, we have been able to drive costs down even further for our clients without compromising quality. Our ability to access managers through sub-advised mandates enables us to deliver high quality solutions that offer outstanding value for money.

– Compatibility with advisers’ risk profiling process: the portfolios have been mapped to major risk profiling tools including Defaqto, Dynamic Planner, Synaptic Risk, Finametrica, eValue, and Oxford Risk.

6.2 Target marketUnder the MIFID II regulations, new product governance requirements apply to both manufacturers (fund managers and platforms) and distributers (advisers and execution-only platforms).

Manufacturers are now required to ensure that each product or fund they offer is designed to meet the needs of a clearly identified target market. They must specify the type or types of client whose needs, characteristics and objectives the products is compatible for and, importantly, identify any groups of clients for whom the product is not compatible. They must ensure that distributers receive and understand the target market and monitor (through regular product reviews) whether they are reaching their intended target market. They must also make available appropriate information about the product approval process.

The WealthSelect Managed Portfolio Service is available for advised customers only and could be suitable for those who:

– are looking for cost-effective ways to invest

– prefer to have investment decisions made by portfolio managers, rather than have personal day-to-day involvement

– want the reassurance that their investments are being managed by professionals with proven track records and that their adviser is ensuring the choice of portfolio continues to meet their needs

– expect ongoing service from their adviser and clear, regular updates on portfolio performance.

The WealthSelect Managed Portfolio Service might not be right for customers who:

– require access to a much greater number of funds than the focused range used by the WealthSelect Managed Portfolio Service

– want access to specific funds, or involvement in day-to-day investment decisions

– do not have an ongoing relationship with their adviser and expect to carry out execution-only business in future.

10


7.1.3. Indicative Total Cost of Ownership**

Risk LevelInvestment style 3 4 5 6 7 8 9 10

Active 0.63% 0.67% 0.71% 0.74% 0.78% 0.82% 0.83% 0.82%

Blend 0.58% 0.58% 0.59% 0.58% 0.59% 0.59% 0.59% 0.59%

7. CHARGES7.1 Fees and other costs7.1.1. Managed Portfolio Service charge

There is no ongoing charge for MPS, however VAT applies to the service charge for CIA and ISA. These two products fall under different tax rules due to the nature of the products. Our CIB and CRA products are insurance wrappers provided by OMWLP and therefore, as you will be acting as an intermediary, the fees are exempt from VAT. CIA and ISA are investment products offered by OMWL and VAT should be levied on the fees in respect of the services provided on these products. The same rules apply to OMWL regarding taxation as with any discretionary service.

7.1.2. Weighted Underlying Fund OCF

11

Investment amount £50,000 £75,000 £100,000 £150,000 £250,000

Product Charge 0.43% 0.40% 0.39% 0.36% 0.34%

VAT charge 0.00% 0.00% 0.00% 0.00% 0.00%

Weighted underlying fund OCF 0.71% 0.71% 0.71% 0.71% 0.71%

Total Cost of Ownership before annual advice charge

1.13% 1.11% 1.09% 1.07% 1.04%

Total Cost of Ownership with 0.75% annual advice charge

1.88% 1.86% 1.84% 1.82% 1.79%


1.63% 1.61% 1.59% 1.57% 1.54%


Product Charge 0.43% 0.40% 0.39% 0.36% 0.34%

VAT charge 0.00% 0.00% 0.00% 0.00% 0.00%



1.01% 0.99% 0.97% 0.94% 0.92%


1.76% 1.74% 1.72% 1.69% 1.67%


1.51% 1.49% 1.47% 1.44% 1.42%

Collective Retirement Account – Active Managed Portfolio 5

Collective Retirement Account – Blend Managed Portfolio 5


* Please note the weighted underlying fund OCF can change subject to portfolio construction. There may be a slight difference between the portfolio weighted underlying fund OCF shown here and the weighted Ongoing Charge Figure (OCF) shown on the Portfolio Explorer tool and other external sites. The weighted Ongoing Charge Figure (OCF) shown on the Portfolio Explorer tool excludes the Henderson UK Property fund’s Property Expense Ratio (PER) and any estimated Performance Related Fee (PRF) applied to the Quilter Investors Global Equity Absolute Return fund. For transparency Old Mutual Wealth shows the weighted portfolio underlying fund OCF inclusive of any PERs and PRFs where relevant on personalised illustrations.

** The investment amount is assumed to remain constant. The indicative Total Cost of Ownership (TCO) is an annual indicative total percentage cost that a customer may pay to invest in the WealthSelect Managed Portfolios after all charges.

These figures are subject to change. The latest figures and further information on the PER and PRF are available in our ‘Fund Information for WealthSelect’ document: http://www.oldmutualwealth.co.uk/Documents/Literature%20Library/Platform/CIA/OMW_PDF8731_Fund_Information_For_WealthSelect_Charge_Basis_3.pdf

7.1.4. Post-MiFID II portfolio weighted total cost

The MiFID II regulations require advisers to disclose costs and charges to customers in more detail, for example including transaction costs. The below table gives an indicative total percentage cost that a customer may pay to invest in the WealthSelect Managed Portfolios after fund charges, but excluding any platform service/product charge or adviser charge. For information on any individual client’s total cost and charges, please see their personalised illustration, where relevant.

Risk LevelInvestment style 3 4 5 6 7 8 9 10

Active 0.79 0.84 0.88 0.91 0.96 1.00 0.98 0.98

Blend 0.74 0.74 0.74 0.72 0.73 0.72 0.71 0.70

All cost and charges information correct as at 14 August 2019.

12

Collective Investment Account – Blend Managed Portfolio 5


Service Charge 0.43% 0.40% 0.39% 0.36% 0.34%

VAT charge 0.09% 0.08% 0.08% 0.07% 0.07%



1.10% 1.07% 1.05% 1.02% 0.99%


1.85% 1.82% 1.80% 1.77% 1.74%


1.60% 1.57% 1.55% 1.52% 1.49%


Service Charge 0.43% 0.40% 0.39% 0.36% 0.34%

VAT charge 0.09% 0.08% 0.08% 0.07% 0.07%


Total Cost of Ownership** before annual advice charge

1.22% 1.19% 1.17% 1.14% 1.11%

Total Cost of Ownership** with 0.75% annual advice charge

1.97% 1.94% 1.92% 1.89% 1.86%


1.72% 1.69% 1.67% 1.64% 1.61%

Collective Investment Account – Active Managed Portfolio 5

http://www.oldmutualwealth.co.uk/Documents/Literature%20Library/Platform/CIA/OMW_PDF8731_Fund_Information_For_WealthSelect_Charge_Basis_3.pdf




7.1.5. Transaction fees

There aren’t any transaction fees for buying and selling. However, customers may incur transaction costs when we buy or sell funds within the Managed Portfolios.

The exact costs will vary by fund:

Single-priced funds: The vast majority of WealthSelect funds in which the Managed Portfolios invest have a single price with a swinging price policy, i.e. a fund’s price will be swung up if it is experiencing net inflows, or down if it has net outflows on any particular day, and all customers buying and selling on that day will pay the same price. A swinging price policy ensures that investors buying or selling shares in the fund pay no more than their own transaction costs – and may even benefit if the price is swung in their favour – while non- trading shareholders are unaffected.

Dual-priced funds: A few WealthSelect funds are dual-priced i.e. they have a higher buying (offer) price and a lower selling (bid) price. The spread between the two reflects the costs of buying and selling the underlying assets within the fund. Investors buying or selling shares in dual-priced funds will therefore always pay their dealing costs while non-trading shareholders are unaffected.

Purchase trades will be placed once all prices are received for the sell trades when rebalancing or changing funds in the MPS. In almost all cases this will be a one-day difference during which Investors will be out of the market for the value of trades being placed and prices could rise or fall.

13


8. ACCESSIBILITY8.1 Minimum investment amountThere is no minimum investment amount stipulated for MPS, please see the ‘Platform Due Diligence’ document for the minimum requirements for the platform and for ISA, CIA, CIB and CRA. Please note that WealthSelect is only available on Charge Basis 3.

8.2 Accessing MPS Setting up a client with a Managed Portfolio is simple. You can do this online through the platform as you would otherwise select a list of funds or personalised portfolio. The Managed Portfolio Service is only available to clients on Charge Basis 3. For clients with a Collective Retirement Account, you will need to convert them to Charge Basis 3 first if appropriate. You cannot convert a Collective Investment Bond to Charge Basis 3. For clients already on Charge Basis 3, you will need to select the Managed Portfolio Service using the option online.

8.3 Contractual arrangementIn line with FCA regulations on investment permissions, the contractual agreement for the Managed Portfolio Service is between you and your client in the case of the ISA and Collective Investment Account (CIA) and between Old Mutual Wealth Life & Pensions Limited and your client in the case of Collective Retirement Account (CRA) and Collective Retirement Bond (CIB) (see 1.2.1.)

8.3.1. ISA and CIA – Agent as Client

For Collective Investment Account (CIA) and ISA contracts, the provider is Old Mutual Wealth Limited. The Managed Portfolio Service is set up on an agent as client basis under ‘COBS 2.4 – Agent as client and reliance on others’. This allows us to treat you as the client for the purpose of the Managed Portfolio Service. It works very well in a platform environment where we can run the specific model to the required mandate and do not need to have a direct relationship with your client. You manage the client relationship, the advice to use the Managed Portfolio Service, and the initial and ongoing suitability. It also enables you to offer the Managed Portfolio Service to your client without needing to hold discretionary permissions in line with FCA requirements.

It is our view that this is the most appropriate model to run the service as it protects the relationship with your client:

– We issue communications to you and you can use your discretion to select which of these are appropriate to forward to your client.

– You are required to ensure ongoing suitability of the service for your client (compared to some direct to client discretionary investment management services), which continues to demonstrate the value of your advice.

8.3.2. CRA and CIB – Client Contract

Old Mutual Wealth Life & Pensions Limited is an insurance firm and the Managed Portfolio Service is provided as an option within the Terms and Conditions of your client’s insurance policy (CRA/CIB). This is their contract with us. One of the conditions of choosing this option is the client must have an adviser appointed while the service is in use. This is because you must complete the suitability assessment, select the appropriate managed portfolio on behalf of your client, and also ensure the ongoing suitability for your client.

Please note that although this is different to the ‘agent as client’ basis operated by Old Mutual Wealth Limited, in practice the Managed Portfolio Service is managed in exactly the same way by Old Mutual Wealth Limited and Old Mutual Wealth Life & Pensions Limited with both models requiring ongoing advice and the assessment of suitability to be provided by you.

8.3.3. Declarations

All we require from you is a declaration, as part of the application process, that your client understands the roles and responsibilities of each party to the service and has given their authority for you to invest using the Managed Portfolio Service on their behalf. We will provide you with quarterly reports that enable you to keep your clients updated about the performance of their investments in line with FCA rules, whilst also helping you monitor the investment decisions being made within the Managed Portfolio Service.

14


Your clients’ investment may fall or rise in value and they may not get back what they put in.

www.oldmutualwealth.co.uk

Please be aware that calls and electronic communications may be recorded for monitoring, regulatory and training purposes and records are available for at least five years.Old Mutual Wealth is the trading name of Old Mutual Wealth Limited which provides an Individual Savings Account (ISA) and Collective Investment Account (CIA) and Old Mutual Wealth Life & Pensions Limited which provides a Collective Retirement Account (CRA) and Collective Investment Bond (CIB).The WealthSelect Managed Portfolio Service is provided by Old Mutual Wealth Limited and Old Mutual Wealth Life & Pensions Limited.Old Mutual Wealth Limited and Old Mutual Wealth Life & Pensions Limited are registered in England and Wales under numbers 1680071 and 4163431 respectively. Registered Office at Old Mutual House, Portland Terrace, Southampton, SO14 7EJ, United Kingdom. Old Mutual Wealth Limited is authorised and regulated by the Financial Conduct Authority. Old Mutual Wealth Life & Pensions Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Their Financial Services register numbers are 165359 and 207977 respectively.Quilter Investors is a trading name of Quilter Investors Limited. Authorised and regulated by the Financial Conduct Authority with FCA register number 208543. Registered in England & Wales under number 4227837. Registered office: Millennium Bridge House, 2 Lambeth Hill, London, England, EC4V 4AJ.VAT number for all the above companies is 386 1301 59.

PDF11541/219-1570/October 2019

8.3.4. Retail/Professional clients

We treat all Old Mutual Wealth platform customers as retail clients and for the purpose of the Managed Portfolio Service for CIA and ISA, we treat the adviser as a professional client. This is covered in our terms and conditions and Managed Portfolio Service terms of business. The reason we treat the adviser as a professional client is because we may otherwise be accountable for more extensive suitable assessments, e.g. in relation to their knowledge and experience. That said, the funds the platform offers are suitable for retail clients and we will always build the portfolios with funds suitable for retail clients.

8.3.5. Regulatory Protection

Your clients benefit from full regulatory protection in relation to the service and to their underlying fund holdings on the platform. However, there are some nuances of which you, and your clients, should be aware:

– Complaints about the suitability of the advice received would be handled as normal between your client and you, with the Financial Ombudsman Service available as normal.

– Complaints about the platform, products, or the way that instructions were processed would be handled in the normal way by the platform.

– Complaints about the Managed Portfolio Service and whether it has been appropriately run in line with its mandate, would be handled slightly differently depending on the products:

– CRA/CIB – Complaints would be considered by Old Mutual Wealth Life & Pensions Limited, as the product provider, directly with the client.

– CIA/ISA – Complaints would need to be handled by you, who in turn could complain to Old Mutual Wealth Limited, as the product provider.

15

WEALTHSELECT - Old Mutual Wealth...quantitative inputs, including each manager’s risk profile,...

Documents

Transcript of WEALTHSELECT - Old Mutual Wealth...quantitative inputs, including each manager’s risk profile,...