Why you need to know what investments are in your DFM portfolio, and how you can find out

The FCA is worried about a DFM mis-selling crisis through SIPP Pensions

How much risk did you want to take with your investments? And how much have they really put you in?

Discretionary fund management is an arrangement where you give your investment money to a Discretionary Fund Manager, who invests it into portfolios it thinks will do well and are in line with the level of risk you want to take.

But what happens if mistakes get made? What happens when a DFM doesn’t invest your money in line with your wishes?

It’s part of a growing problem…

Investments and risk

If you didn’t know already, there’s one simple thing all investors of all levels of experience need to know: ALL investments carry risk.

How much risk you’re capable of taking on all depends on your personal wishes, how much money you have or can earn (which effects how fast you can recover if you lose your investment), and how experienced and knowledgeable you are about investing.

But if you don’t know much about investing at all, but your IFA recommends the use of a DFM, it’s up to your IFA and/or DFM to work out how much risk you can accept.

In 2017, the FCA put a warning out to SIPP providers, to let them know about how some DFM portfolios might be being abused, with high-risk, non-standard investments stuffed into the portfolios of clients who couldn’t stand (nor would wish to invest in) that level of risk.

Read more about the warning from the FCA here.

Finding out what investments are in your DFM portfolio

The thing about your DFM investments is, they can change from when you first invested. Providing the initial investments were “liquid”, meaning they can be sold and more bought easily and at short notice.

But if your DFM has invested your money into non-standard assets, it could be that your money is a bit trapped.

So how do you find out?

Well, the first place to check is any recent statements from your DFM or from your SIPP provider.

Sometimes, this is simply a pie-chart, indicated the TYPE of investments you’ve gone into, rather than the actual funds. To be sure of what your monies gone into, you need to go further than that.

Ringing up your SIPP provider, or your DFM is the next step. They’ll need to verify who you are before discussing your portfolio, but once that’s out of the way they should be able to break down what individual “holdings” are within your DFM portfolio, and what their nature is.

What if the list means nothing to me?

If you still feel you’re unsure whether your investments are right for you, you can contact the team at Spencer Churchill Claims Advice for a FREE initial assessment. Following the FCA warning about DFMs, we’ve been analysing portfolios on a daily basis to discover whether they really contain the low to medium risk investments people are told that they do.

If not, we can explain exactly what you’ve gotten into, and even help you pursue a claim for your money with no upfront cost, just like hundreds of other successful clients who’ve won back their pensions with Spencer Churchill Claims Advice.

Please note: you have an initial cooling off period of 14 days, if you cancel outside of this period you may be charged for the work carried out and if we have already submitted your claim, which results in an offer of compensation subsequently being made, we will charge our full fee as per our T&Cs – our fee is 20% + VAT – a total of 24%.