The acceptance of risk profiling models for IFAs and clients alike

Mickey Morrissey, head of distribution, Smith & Williamson

Go to the profile of Smith & Williamson
Mar 07, 2019

I recently attended the 6th Dynamic Planner Annual Conference organised by Distribution Technology at the IET (Institute of Engineering and Technology) in London. The event was attended by well over 200 IFAs plus numerous product providers, sponsors and even the odd politician in the guise of Alastair Campbell.

The conference began with a roundup of events in Davos by Simon Jack, the BBC Business Editor, followed by him questioning a number of fund manager CIOs, including Guy Monson from Sarasin and Marcus Brookes from Schroders, on their thoughts concerning world markets and where they might be allocating assets during the course of the year ahead and any concerns they might have regarding valuations, bond markets, or political events. This was an excellent, insightful session and dovetails neatly into much of what Distribution Technology offers by way of risk profiling tools for the wealth management market.

Ever since we launched our models in 2012 they have been risk profiled by Dynamic Planner. We offer models 3 to 8, or Defensive to Dynamic Growth. Not only has out sourcing investment management services from IFAs to wealth managers grown significantly during this period but so too has an acceptance of risk profiling for clients to ensure their objectives are understood and they are not mis sold savings products as has so often been the case in the industry in the past.

The Investment Strategy and Performance teams at Smith & Williamson design strategic, diversified, multi-asset allocations which are expected to deliver returns characteristics which are commensurate with a client’s given risk target, and which will be aligned with Distribution Technology’s risk profiles. Regular tactical asset allocation reviews from Smith & Williamson’s Asset Allocation Committee and the Managed Portfolio Service Investment Committee are overlaid in order to seek outperformance, whilst ensuring that overall risk exposure remains appropriate for a given profile. Crucially, this makes sure that a client advised by an IFA to invest in our Defensive model will not inadvertently become a Balanced Growth client. There certainly appears to be much more of an acceptance from the market, both IFAs and wealth managers, that this is the correct way to conduct business. Needless to say there are other risk profiling tools available carrying out a similar job and therefore clients should take comfort that their interests are being looked after by both their adviser and investment manager.

So what is the immediate future for risk profiling tools and risk rated models and funds? Surely the answer is one of significant growth over the next few years. I look at it in a similar fashion to driving a car. If I want a rather dull but hopefully predictable journey to a destination I might take the motorway. Sure there may well be the odd holdup along the way but I’ll get there eventually. On the other hand I might prefer to take the more adventurous route, it could prove to be a bit of a rollercoaster ride and it will certainly, in my view, be more fun, and it might even be quicker, but there will definitely be a few bumps along the way. The same could be said for the world of model portfolios, the trick is to work out which is most suitable for the client and risk profiling tools go a long way to solve that particular issue.

 Mickey Morrissey, head of distribution, Smith & Williamson




By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.

 Risk warning

Investment does involve risk. The value of investments and the income from them can go down as well as up. The investor may not receive back, in total, the original amount invested. Past performance is not a guide to future performance. Rates of tax are those prevailing at the time and are subject to change without notice. Clients should always seek appropriate advice from their financial adviser before committing funds for investment. When investments are made in overseas securities, movements in exchange rates may have an effect on the value of that investment. The effect may be favourable or unfavourable.


Note to editors

Smith & Williamson is an independently owned financial and professional services group. The firm is a leading provider of investment management, financial advisory and accountancy services to private clients, professional practices, entrepreneurs and mid-to-large corporates. The group’s c1,700 people operate from a network of twelve offices: London, Belfast, Birmingham, Bristol, Cheltenham, Dublin (City and Sandyford), Glasgow, Guildford, Jersey, Salisbury and Southampton.

Smith & Williamson Investment Management LLP is part of the Smith & Williamson group.

Smith & Williamson Investment Management LLP

Authorised and regulated by the Financial Conduct Authority

Smith & Williamson Investment Services Limited

Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority

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Go to the profile of Smith & Williamson

Smith & Williamson

• Active portfolio management, ensuring diversification and risk management. • A dedicated MPS investment team, supported by over 50 investment professionals, giving you access to our broad intellectual capital. • Ongoing monitoring of our model portfolios by DT, Synaptic and Defaqto Engage ensuring our models stay within the permitted risk parameters. • No set rebalancing dates, enabling our MPS managers to amend asset weightings as and when their views on markets and investment strategy change. • Our MPS has been awarded a 5-star Defaqto rating in 2014, 2015, 2016, 2017,2018 and 2019.

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