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Last Article Uploaded: Thursday, January 30th, 6:48AM
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Class DIMS options coming

A growing view amongst the financial advisory community is that the Financial Markets Authority will issue very few licences to advisers to offer personalised DIMS, but others are lining up to offer class DIMS solutions.

Friday, May 30th 2014, 7:00AM 10 Comments

Currently the market is waiting for the FMA and the Ministry of Business, Innovation and Employment to release the guidelines for offering class and personalised DIMS, however a number of key speakers at the recent SiFA Conference in Taupo believed the number of licences for personal DIMS will be limited to a small number.

A number of fund managers and providers though are preparing to offer their a class DIMS service to advisers including Grosvenor Financial Services and Sovereign with its Select Investment Service.

Grosvenor chief executive Alan Yeo says a class DIMS services is what the company has been offering since the company was established 16 years ago. It had also been running similar services in Australia so had good knowledge in how to go about it.

While he is critical of the changes going on, describing them as an "over-reaction" by authorities to the David Ross case, they are perfect for Grosvenor.

"They probably couldn't write the legislation better to suit our business model," he said.

Yeo also acknowledges the changes are major for authorised financial advisers; many are concerned about the changes and the continuing regulatory impact being put on their businesses.

"We see some advisers are getting pretty exhausted (with all these changes)."

Yeo says advisers will look to providers like Grosvenor for class DIMS services as it means they won't have to go through what is likely to be a difficult process not only to get the licence but for on-going compliance.

He also says class DIMS don't have to be restricted to model portfolios as many believe. The Grosvenor offering allows for some flexibilty for advisers to add other investments and tilts to the portfolios.

Grosvenor chief investment officer David Beattie says Grosvenor will research and take responsibility for the other assets added to the portfolio.

MBIE referred queries about the guidelines to the FMA.


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Comments from our readers

On 30 May 2014 at 7:46 am Pragmatic said:
It seems that DIMS will accelerate the industry towards the inevitable: those investors who are willing & able to pay will be provided with a bespoke financial solution. The rest will have the choice of a black box solution.

In listening to the debate, it seems that the non aligned financial advisor is considered to be the highest risk by the Regulator to the industry, with all efforts to eradicate current behaviours. Time will tell if this has been the correct outcome... although remembering that a reduced industry will require a reduced Regulatory workforce
On 30 May 2014 at 12:54 pm Brent Sheather said:
Never have offered DIMS so thank goodness this legislation won’t affect me but reading this article it sounds like another step backwards from the perspective of mum and dad retail investor. Quite depressing really. Thank goodness I started in this industry back in 84 and not 2004.

Regards Brent
On 31 May 2014 at 1:21 pm Colin said:
Brent - If you don't offer DIMs, what do you offer?
On 2 June 2014 at 1:16 pm brent sheather said:
Non-discretionary advice of course. But if any client consistently ignores it they get told to go away...unless of course they have 10m or more....
On 3 June 2014 at 12:51 pm Ally said:
But Brent, you have previously said you have 600 million or so "under management". That's different from "giving non-discretionary advice"......
On 3 June 2014 at 2:41 pm Brent Sheather said:
But Ally how is it different …. I will admit that our annual fees are much lower than most other funds “under management” but in my humble view I think our business model is far more sustainable than most.
Interested to hear from you how “that’s different” … apart from the fees of course.
On 3 June 2014 at 3:53 pm Gavin Austin ABCompliance said:
Very strange Brent that you've been licensed to provide DIMs since you became an AFA. I guess you'll be giving that up so that people who look up the FSPR register won't be mislead into thinking that you do.S
uggest you look at sec 17 (1)(a) (iii) of the FSP Act 2008 as it has a potential penalty of $10,000.
On 4 June 2014 at 8:57 am Ally said:
But Brent, why are you charging "annual fees" when you are not managing client funds, just giving "non-discretionary advice" ?
On 4 June 2014 at 9:00 am Brent Sheather said:
Hi Gavin, yes that is strange because as far as I know we aren’t licensed to provide DIMS and certainly haven’t but you are the compliance expert so I suppose you are right! Incidentally I hope nobody looks up my name on the FSPR register as I am not taking new clients.

I was an expert witness in a trial of a stockbroker who took advantage of his DIMS position with the net effect that the client lost about $3 million so I am not in favour of discretionary management at all.

I think non-discretionary where you make a recommendation and then the client decides whether to execute or not is a better, safer and lower cost business model. Certainly when I discussed the matter with the FMA a few years ago and said we didn’t hold clients assets they viewed us as a relatively low risk operation. .

Didn’t Oscar Wilde say “a stockbroker is someone who invests your money until it is all gone”. LOL.
On 4 June 2014 at 9:44 am Brent Sheather said:
Hi Ally, we are doing everything that a DIMS advisor does except we are getting permission from the client before executing the transactions. With $600 million plus under management and just three advisers, one of whom also does research, you would have to say the model is moderately successful. Agreed?

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