Destination sunset clause: A project management checklist for advisers

by: Karl Dines


Karl Dines puts his first lesson in project management, the PPPP principal, to good use ahead of the impending sunset clause

I went to college in the 80s. My accountancy lecturer had a beard with a collar length curly mullet, a black leather waistcoat, black jeans and a check shirt.

We knew he was annoyed one day by the sound his cowboy boots made clacking on the parquet floor as he walked into the lecture room.

He angrily picked up the chalk, wrote “PPPP” on the blackboard and walked out. This was my first lesson in project management.

My economics lecturer then came in and explained that all but three students had failed the last assignment and PPPP meant ‘Planning Prevents Poor Performance’.

He went on to explain that project management was simply working out how to get from one point to another in the correct time, it’s a kind of backwards thing where you know where you need to be and what it needs to look like, so just plan what you need to do to get there.

This was my second lesson in project management.

So, what does a project plan need to look like? Anything you want really, as long as you get the desired outcome as efficiently as possible.

Planning is probably the least amount of time we spend doing stuff but it arguably is the most important phase.

Imagine you had a task to complete with a deadline, such as the sunset clause; although the deadline is April 2016, some platforms are forcing a completion date of December 2015.

It’s June now, so that’s six months.

Policy Statement PS13/1, Payments to platform service providers and cash rebates from providers to consumers, came into effect on 6 April 2014 and brought with it changes to the way in which platform providers were able to accept and handle rebates received from the investment fund charges.

The consequence of this paper is that, with the banning of rebates able to be paid to platform providers, all trail commission (sometimes referred to by them as fees) will be turned off by the 6 April 2016 at the latest.

A structured approach to dealing with this issue will make best use of your resources because, let’s face it, you’re not looking at generating income to your business, but protecting income that’s already in place.

This makes efficiency of running the exercise even more important.

Here is an example of the elements needed to create a small, task driven project plan, it’s not exhaustive and there are alternatives as each project is unique:

1. Setting up

Define what the outcome is, what needs to be done, how best to tackle it and who’s involved

2. Planning

What exactly needs to happen, who is going to do it and what’s the completion date

Discovery: [inset relevant name here] to obtain MI on affected clients, by contacting all suppliers and collating that information by [inset date here].

Obtaining MI is the starting point, to consider platform assets and those that were in force prior to the start of RDR in 2013. Your platform of choice should be able to assist you in this and, in most cases, information can be sent to you digitally.

Identification: [insert relevant name here] to cut data and pinpoint affected assets to help construct a contact strategy by [insert date here].

The first thing to make clear is that providers and platforms will have their own interpretation of the guidance under Policy Statement 13/1, and indeed may take assets into a sunset clause strategy that, in theory, fall outside of current requirements.

It is wise at this stage to contact your providers and get chapter and verse on what assets are affected. Some platforms have already produced guidance.

Comparison: [inset relevant name here] to compare charges and non-charges to ensure a move is in the client’s interest by [insert date here].

As you would expect, any switch should be recorded as thoroughly as possible as there may be a number of circumstances in which a change in the make-up of your client’s assets might take place.

For instance, it may be as simple as a move to clean share class (remaining in the same asset from the same fund manager), or it may involve a wholesale move of platform along with a migration into your current centralised investment proposition.

Implementation: [insert relevant name here] to instigate client review procedure and execute any recommendations by [insert date here].

Consider a streamlined compliant approach. The use of software tools in a ‘best practice’ manner will enable you to spend less time assessing and analysing risk, and if you conduct business in a ‘through processing’ method can remove duplication and reduce errors when processing recommendations.

3. Monitoring

[insert relevant name here] to oversee the plan and ensure it remains on track.

4. Closing:

[insert relevant name here] to recognise when the plan is completed and officially shut it down.

It might look like a lot of work for something that essentially is an easy thing to do and, once you do think about it, it becomes easier.

But isn’t that just planning to prevent poor performance?

About the Author

karl-dinesKarl Dines is head of business consultancy at Verbatim Asset Management

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