Rising CIP admin burden drives outsourcing surge among advisers

Financial advice firms outsourcing to an external investment manager are spending less than a quarter of the time on their centralised investment propositions (CIP) than those running investments in-house, research from Copia Capital has indicated.

The Copia study, conducted by the lang cat, revealed that a third (36%) of UK advice firms have seen the admin burden of their CIP operations increase over the last year.

On average, firms estimate they now spend 81 days annually managing their CIP, up from 71 days in 2022.

Copia suggested that this increased admin is driving a surge in outsourcing, with more than half (55%) of advice firms now outsourcing CIP management, and just 34% running models in-house – compared to 38% and 51% respectively two years ago.

“Our latest report confirms advisers’ fears of two years ago that the requirements of Consumer Duty would significantly increase their CIP administration to the point it could become unmanageable,” Copia managing director, Robert Vaudry, commented.

“The new research shows that firms spend 10 more days a year managing their CIP on average, compared to 2022, with most of the burden carried by those who run their investments in-house.

“Firms face a stark choice as they grow. There will come a tipping point where, to continue to manage their CIP effectively, firms will need to invest more in their internal resources by recruiting investment and operational specialists, using technology wherever possible and potentially taking on their own discretionary permissions.”

Copia’s new report, which was based on a study among 155 financial advice professionals, also indicated that ongoing reporting requirements are among the biggest pain points for all adviser firms, exacerbated by the requirements of Consumer Duty. Although outsourcing doesn’t remove the admin burden completely, it does reduce it significantly.

The research revealed that firms running their CIP in-house spend 139 days on investment management, compared to 32.5 days for those who outsource. For those managing their CIPs in-house, the implementation stage was highlighted as their greatest headache, with 53% rating it as the activity causing the most pain, compared to 31% of firms outsourcing their CIP.

“With the FCA’s continued focus on Consumer Duty, fair value and ongoing services, we expect this decision on how to manage a CIP to become even more important,” Vaudry added. “Doing nothing and maintaining the CIP status quo, is unlikely to be a viable path to good client outcomes.”



Share Story:

Recent Stories


FREE E-NEWS SIGN UP

Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.


Intergenerational lending
MoneyAge News Editor, Michael Griffiths, hosts Family Building Society BDMs, Amar Mashru and Arif Kara, to discuss intergenerational lending and explore ways that buyers can use family income to help increase their borrowing capacity when applying for a mortgage

Helping landlords make their cash work harder
MoneyAge Editor, Adam Cadle, talks to Family Building Society BDMs, Arif Kara and Nathan Waller, about the resilient BTL market, the wide variety of landlords that Family Building Society caters for, and how niche products like an Offset mortgage can help improve cashflow.

An outlook on the BTL market
MoneyAge Editor, Adam Cadle, talks to Landbay senior regional account manager, Alex Witham, about current market sentiment within the BTL space and Landbay’s success in this area