Advisers complain of paperwork deluge

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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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