12 Relationships between advisers and DIMs White-labelled and co-branded propositions Some DIMs also offer white-labelled and co-branded solutions. These do not change the fundamental nature of the services provided but do impact upon how they are presented to clients. An adviser firm using a white-labelled or co-branded solution may well be considered a ‘co-manufacturer’. The FCA have cited ‘white-labelling’ as an indicator a comanufacturing arrangement might exist. With a white-labelled proposition the DIM typically works with the adviser firm to produce a set of model portfolios, managed by the DIM, to reflect the specific objectives and characteristics of the adviser firm’s clients. These portfolios are then ‘white-labelled’ as the adviser’s own models. With a co-branded solution, the model portfolios managed by the DIM are co-branded with the logo of the DIM and adviser firm. White-labelled and co-branded propositions bring with them a different set of regulatory obligations, which are not explored in any detail in this paper. Briefly, an adviser firm must not hold itself out as actually ‘running the money’ as it does not have the necessary discretionary permissions to do so. ‘Running the money’ is the role of the DIM. Any marketing material put together for the end investor must make very clear the respective responsibilities of the adviser firm and DIM. Similarly, charging structures need to be fair and disclosed clearly. Very careful consideration needs to be given to the regulatory implications when setting up white-labelled or co-branded arrangements. Adviser firms will need to consider whether they are ‘co-manufacturers’ and any Consumer Duty obligations that flow from that. See separate guide to co-manufacturing arrangements. Platforms Increasingly, advisers’ use of DIMs’ MPS involves the participation of a platform, usually a third-party platform but sometimes a platform operated by the DIM itself. Where platforms are involved, they provide the administrative infrastructure by which the solution is provided to the underlying investor, i.e. custody, trading/settlement and reporting functions. The platform can play a key role in delivering the proposition as well as providing useful portfolio tools for the adviser and indeed, for underlying investors. The contractual arrangements between the adviser firm and DIM need to consider the role that will be played by the platform and the regulatory responsibilities it will assume, for example for MiFID reporting and best execution. As both manufacturers of their own platform services and distributors of third party products/services, platforms need to consider their own Consumer Duty obligations. Chapter one - Relationships between advisers and DIMs
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