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Advisers complain of paperwork deluge

Advisers say increased paperwork demands on discretionary investment management services (DIMS) providers are confusing their clients.

Tuesday, November 3rd 2015, 6:00AM 4 Comments

by Susan Edmunds

Under Financial Markets Conduct Act requirements, DIMS clients will receive reports from their adviser, the DIMS license holder, such as the fund manager, and the custodian.

That could be up to eight reports for each client every year.

Fiona Judd, who has a class DIMS license, said her clients had received a lot more paperwork since the new DIMS structure came into effect.

“A number of clients have queried why Aegis has sent them information but didn’t include what they think is the most important thing, what the portfolio is valued at. I have to spend my time explaining that the custodian is demonstrating they are being a custodian, it’s not to do with the value of the portfolio.”

She said most clients understood that the reporting was not for their benefit but some had questioned the role of the custodian. “They say ‘that’s what we pay you for Fiona’, and I say ‘the Government has decided to step between you and I’. “

Judd said she was in the process of doing annual reviews and it was something that was mentioned by clients.

“They’re noting that it doesn’t improve their lives. But to be honest the industry is pretty numb to this. We’ve been numbed into submission.”

Alistair Bean, who has a personalised DIMS license, said it was probably a case of paperwork overload for clients.

Many of his clients had received a recent custodial report. “I’ve had contact from five or six clients asking what it was. I send out a quarterly newsletter as well and I’ve included in the newsletter that they were going to receive this documentation.”

He said if the reports arrived without any warning from an adviser it could be unsettling for them.

While it was manageable for a small practice, he said maintaining communication with clients about the documentation they were receiving would be difficult for bigger operations.

Bean now must update his disclosure statements and give written notice to existing clients regarding the description of his service and scope of investment authority by the end of this month, to comply with the new rules.

Tags: DIMS

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Comments from our readers

On 4 November 2015 at 8:22 am jpaynter said:
I did not know what to make of the report when I received it and my daughters (21 and 16) received one each too. Such reports may put them off trying to understand investments in the future. So rather than be a service, such reporting is putting people off and increasing the costs in running the accounts, that will mean higher fees and lower returns.
On 4 November 2015 at 3:44 pm Brent Sheather said:
I don’t do DIMS, thank goodness, but this looks like another regulatory disaster and the fools that perpetrated this should lose their jobs.

Regards
Brent
On 9 November 2015 at 12:12 pm sMiles said:
It’s a perfect time to invoke French economist Frederic Bastiat who wrote in 1850 that we should “Treat all economic questions from the viewpoint of the consumer, for the interests of the consumer are the interests of the human race.” That should be expanded to include regulatory questions. Disclosure principles have gone too far. I bet no-one asked consumers what they wanted although they would have had an 'opportunity' to comment. How many consumer investors read officialdom newsletters or understand them?
On 10 November 2015 at 10:22 am Brent Sheather said:
French history offers another useful insight – didn’t they guillotine the royals on the basis that they were perceived to be of no value and just a drag on the working class.

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