The FMA released a consultation paper yesterday on the eligibility criteria for providing personalised DIMS.

These include four key areas: Capability, operational infrastructure, financial resources and governance. AFAs who are currently authorised to provide DIMS don’t have to apply for permission to continue, but must meet the new criteria by the middle of next year.

But advisers say there are still areas of uncertainty about how they will be able to go about providing personalised DIMS.

The paper says the definition of personalised DIMS focuses on the design of the investment strategy, not the design of the investment portfolio.  But investment strategies must be both devised and implemented without reference to a model portfolio.

FMA spokesman Andrew Park said: “Personalised DIMS does not include an investment strategy that is merely customised from an investment strategy that applies to a class of clients.    A model portfolio is designed for a class of clients.  Using a model portfolio as a core part of the investment strategy therefore does not fit into the definition of personalised DIMS as it is merely customised from an investment strategy that applies to a class of clients. “

He said those who were unsure about the service they were providing should contact the FMA.

Adviser Alan Clarke said he doubted that many advisers would bother with personalised DIMS.  “I can’t imagine many are going to do it.”

Most would opt for class DIMS or ask their clients to sign off on all decisions, he said.

One of the proposed standards for advisers is that they stress test their strategies as appropriate but Clarke said that would not be possible for many AFAs and they would have to outsource it. 

Advisers should be encouraged to focus on what they were good at, he said. “I think my job is not to just build a portfolio but listen to issues to do with clients’ money and help them. People say ‘can I afford to lend my children money’, ‘can I afford to retire’, ‘how long will my money last’. That’s what I’m supposed to be doing, I thought.  If I’m doing all that, how can I do that as well?”

The FMA is hosting DIMS workshops in early December.

Submissions on the consultation paper close December 9.