1. 01
WORKING IN PARTNERSHIP
DISCRETIONARY PORTFOLIO SERVICES
FOR FINANCIAL ADVISORY FIRMS
At Quilter Cheviot we have a long history of working in close co-operation with Financial Advisers.
Our discretionary investment management portfolios provide an important and effective element of
many investors’ financial plans. We believe that combining our investment management expertise with
the skills of an experienced financial planner delivers a compelling solution that is ideally placed to
meet our mutual clients’ investment needs. This document describes how we see that partnership
works in practice.
Accountability for portfolio performance
Providing regular reporting to clients
Research into whole of market fund and
direct investment solutions
SERVICE ELEMENT
Fact finding
DESCRIPTION
Gathering an in depth understanding of the
client’s current financial situation, tax position,
arrangements, objectives and future needs
Consideration of tax structures and providers,
product solutions and investment services
that might best meet the client’s needs
Detailed research to ensure providers can
supply a suitable and sustainable service
Agreeing attitude to risk and investment
objectives with the client
Agreeing the type of discretionary service
to be provided with the client
Developing a suitable portfolio for the client
that is managed on an ongoing basis in line
with client requirements
Researching financial planning solutions
Due diligence on product, service
providers & selection of the most
suitable provider
DPS Service
(individually managed, bespoke
discretionary portfolios)
MPS Service
(centrally managed discretionary model
portfolios)
Outsource of investment services
DPS & MPS Services
Regular financial review
Selecting the managed portfolio investment
strategy that is most suitable for the client
risk profile and investment objectives
Overseeing the movement of funds into the
client portfolio
Research into whole of market fund and
direct investment solutions
Developing a suitable portfolio for the client
that is managed on an ongoing basis in line
with client requirements
Monitoring and evaluating portfolio
management with the client against
pre-agreed benchmarks
To review understanding of the client’s
current financial situation, tax position,
arrangements, objectives and future needs
Financial adviser
Investment manager
Investment manager
Investment manager
Investment manager
Financial adviser
Financial adviser
Financial adviser
RESPONSIBILITY
Financial adviser or joint
Financial adviser or joint
Financial adviser or joint
Investment manager Financial adviser

2. 02
WORKING IN PARTNERSHIP
DISCRETIONARY PORTFOLIO SERVICES FOR FINANCIAL ADVISORY FIRMS
CONTACT US:
Quilter Cheviot
One Kingsway
London WC2B 6AN
t: +44 (0)20 7150 4200
w: quiltercheviot.com
Quilter Cheviot Limited is registered in England with number 01923571. Quilter Cheviot Limited has established
a branch in Dublin, Ireland with number 904906, is a member of the London Stock Exchange, is authorised and
regulated by the UK Financial Conduct Authority, is regulated by the Central Bank of Ireland for conduct of business
rules, under the Financial Services (Jersey) Law 1998 by the Jersey Financial Services Commission for the conduct of
investment business in Jersey and by the Guernsey Financial Services Commission under the Protection of Investors
(Bailiwick of Guernsey) Law, 1987 to carry on investment business in the Bailiwick of Guernsey. Accordingly, in some
respects the regulatory system that applies will be different from that of the United Kingdom.
An issue that many financial advisers face with the decision to use a discretionary fund manager (DFM) is how do they justify
charging an ongoing fee.
Research commissioned by Quilter Cheviot has shown that clients are willing to pay a reasonable fee for services they feel
add value. In a recent Quilter Cheviot survey, over 80% of clients who have been introduced to us via financial advisers said
they were satisfied with the level of combined fees they pay. (Source: AMP research 2013). This research is proof that when
properly positioned, the partnership between financial adviser and DFM can work well for clients.
HOW DOES THIS WORK BEST?
Our experience, based on working with financial advisers for over 25 years, tells us that there are a number of ways that a
combined financial adviser and DFM proposition where the financial adviser introduces the client to the DFM, can be both
beneficial to clients and commercially viable for both service providers.
First let’s consider the regulatory position. The FCA has been clear about this and listed some of the services which warrant
an ongoing adviser charge:
• Providing Know Your Client (KYC) and investment preference information, including assessment of capacity for loss and
investment objectives.
• Receiving information on the portfolio and explaining this to the client.
• Monitoring performance against appropriate agreed benchmarks.
• Periodically reassessing that discretionary management is in the client’s best interests.
• Due diligence on discretionary investment manager.
The table below shows how the division of responsibility between financial adviser and DFM can work for financial adviser
introduced clients:
Responsibilities
Discretionary
portfolio service
Managed
portfolio service
Portfolios on third
party platforms
Investment management
Suitability of investments to meet
mandate
Investment fact sheets N/A
Transactions
Custody
Provision of valuations, statements and
performance reports
Anti-money laundering
Suitability of investment mandate -
initial*
Suitability of investment mandate -
ongoing*
Know Your Client (KYC)
Provision of KYC information and
investment preferences
Receives information on portfolio
Monitors investment performance
Periodically reassesses use of DFM
Key: Investment Manager Financial Adviser Third Party*responsibility for suitability is agreed at the outset
and both parties are made clear of their responsibilities.