WELCOME SIMPLYBIZ INVESTMENT FORUM 2015

Housekeeping No fire drill expected Please turn mobile phones to silent Workbook 9 presentations – 30mins each - Feedback Structured CPD – 4hrs 30mins Please ensure you have signed the register!

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Agenda

Agenda – cont.

Agenda - cont COMPLIANCE UPDATE

Learning Outcomes How to carry out research for Non Mainstream Products How to document and deal with recommendations taking account of relevant Retail Investment Products Understand the need to have a clear and consistent approach to demonstrate independence Understanding the requirements for delivery of on-going services

Independence Regulatory Phrases; Unbiased & Unrestricted Comprehensive review and fair analysis of the relevant market “Keeping an Open Mind” What they mean when they state Comprehensive; This is a comprehensive review across the market - not a comprehensive review of every product in the market

Suitability Questions

Considering the Market Options Should you consider NMPIs? What is a NMPI? Non-Mainstream Pooled Investment

NMPI’s Non Mainstream Pooled Investments are; Units in unregulated collective investment schemes (UCIS) Units in qualified investor schemes (QIS) Securities issued by certain special purpose vehicles, other than an excluded security (SPVs) A traded life policy investment (TLPIs) Rights to, or interests in any of the investments listed above

NMPI’s Restrictions on the promotion of NMPI’s The product should not be considered as part of the relevant market for ordinary retail clients May meet criteria for; Certified High Net Worth Investors Certified Sophisticated Investors ‘Self’ Certified Sophisticated Investors

Certified High Net Worth Those who have signed, within a previous 12 months period, a HNW Investor Statement confirming; Annual income to the value of 100k or more and/or Hold net assets* to the value of 250k or more * excludes main property and pensions

Sophisticated Client Requires a firm to sign a written certificate confirming this has been assessed; This certificate confirms the person has sufficient knowledge to understand the risks associated with this activity, and; That person must have signed the Sophisticated Investors Statement ‘Self-Certified’ means that person can claim an exemption to then be classed as sophisticated

Non Mainstream Products Remember - NMPIs are restricted in their promotion and are not generally suitable for ordinary retail clients There is however no definition of non-mainstream products These are often thought of as higher risk or more complex products

Examples of NMPs Venture Capital Trusts (VCTs) Enterprise Investment Schemes (EISs) Investment Trusts? Structured products? AIM investments Exchange Traded Funds & Products (ETF / ETP’s) Absolute Return Funds?

NMP Suitability Cycle Client Suitability & Best Interest Compliance Analysis * Present Solution Research ATR * Fact- Find Monitor & Review Regulation Target Clients NMP Suitability Cycle PII Review * Vulnerable clients

Research Investment Trusts / ETF’s: Structured products: Synaptics

Research Venture Capital Trusts / Enterprise Investment Schemes: AIM Investments:

Research There is not one tool that covers all these areas Research needs to; Be client specific or centralised Independent – don’t reply on one provider’s literature Needs to be up to date Contain Due Diligence

Due Diligence There is no regulatory criteria for this You should consider; Provider History – Future sustainability Record of similar investments and experience ‘Does it do what is says on the tin’ Keep the investment under review

Thematic Review – Reviews Independent research carried out. This identified; 2/3rds of clients are receiving on-going services 97% of these are (very) satisfied with the service Clients value and are happy to pay for this

Services Clients Value Unrestricted access to their adviser Prompt responses to any queries Being proactive with communications Personal impact of any legislative changes Face to face reviews

The Review – Client Values Discussion of needs and circumstances Review of risk profile Review of investment and funds Reassurance should funds decrease in value Explanation and impact of any changes in legislation Forecast and future market movements Opportunity to ask questions

Regulator Expectations Deliver services as agreed Be clear (in cash terms) of the cost of the service Tangible and interactive MI to identify appropriateness of the services Does the firm have adequate resources to deliver Evidence of delivery

Evidence of the Review

Any Questions?