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Are underqualified CF30s the biggest risk to your business?

by Elsa Buchanan on May 19, 2014 at 10:46

Are underqualified CF30s the biggest risk to your business?

Underqualified CF30s and decentralised investment functions are two of the biggest headwinds facing wealth management businesses, according to London & Capital (L&C) managing director Daniel Freedman.

Freedman (pictured) argues the professional requirements for those with CF30 regulatory permissions are too low. According to the FCA there is in fact no minimum professional standard for those with CF30s, although this can vary from role to role dependent on the scope of their responsibilities.

Combined with a lack of supervision, he is concerned that having no real benchmark requirement could mean the ramifications are profound.

‘The problem is that if you are not fully qualified, don’t have the right background and are not organised with a proper chief investment officer commanding the ship, the risk in your business increases dramatically when you’ve got various unqualified people picking stocks,’ he explained. ‘The qualification to be a CF30 for running portfolios is too low. These people have to be more highly qualified to make investment decisions.’

While Freedman acknowledges this isn’t purely a regulatory issue, he believes the FCA should provide clearer guidelines about what responsibilities individuals can take when it comes to decisions for client portfolios.

Freedman’s observation comes after an unsuccessful six months spent interviewing CF30s to join the company.

‘We can’t find people that have high enough qualification in terms of their experience and the exam qualifications to fit the role of an actual portfolio manager. I had interviews with young guys, a couple of years out of college who are currently managing large sums of money and entire portfolios. I took none on.’

As part of L&C’s strategy to enhance its service it has introduced a ‘front office project’, set up with the help of former CIO Ashok Shah to improve the client experience and compliance team.

Over the last 18 months the compliance team has increased from one to four and the focus has been on training staff so that they really understand the importance of risk profiling.

‘We’ve also changed the way the portfolio is set up for the client, more orientated towards risk, volatility, weighted returns.’

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2 comments so far. Why not have your say?


May 19, 2014 at 11:54

This doctrine is TOTAL NONSENSE. Where does it say that in the history of markets that somebody needs to be heavily qualified to pick stocks? Yet again common sense capitalism is being quashed by crony capitalism through a doctrine of QUALIFICATION that in the end does NOT work and protects nobody. Experience and competence is the key to success and there are simply too many inexperienced CF30's out there managing money on box ticking formulas. But then again there are people like Freedman feeding the financial media with this doctrine that destroys flair and innovation along the way. What has background got to do with anyway? The 'old' market understood the difference and balance between qualification, experience & competence. Investors need to think very carefully before signing mandates with firms that give guarantees of modern professionalism supported by this type of doctrine that is now the 'RDR' standard. Their rewards are FEES supported by questionable gobbledegook.

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May 19, 2014 at 12:24

Highly qualified with poor attitude is worse than advisors without qualification. The clients will follow you if you treat the clients' money are just as precious as your own. The market does not always follow professional analysis or logic.Think twice for any individual before subscribe to corporate advsors, they tend to protect themselves to the hilt, unless you are corporate yourself with the accountants and lawyers on standby

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