Risk ratings determined by risk profiling tools are often different to those used by fund providers to rate their funds, making many portfolios potentially unsuitable for clients, a report has warned.
Research by CWC Research and consultancy the lang cat found a number of discrepancies in how outsourced portfolios are risk-rated by different providers and warned ratings changed considerably over time. It warned advisers could fall foul of the regulator's suitability rules if they fail to ensure both ratings are checked and maintained on an ongoing basis. The report looked at discretionary managed funds, model portfolios and multi-asset funds and found alarming movement of asset risk over a time span of as little as three years. The regulator previously warned advisers they canno...
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