Greetings – Mike here. I hope you are all staying nice and hydrated.  

About a million years ago, back in my Skandia days, I used to help look after a piece of CD-ROM (look it up kids) software called U-Select. It had the slightly annoying “feature” of occasionally bricking your PC as you attempted to install it, but if you managed to get over that hurdle it was genuinely groundbreaking. The software gave advisers a risk profiler, asset allocation model, and the ability to research funds to populate said model. Tools such as U-Select, and more independent services such as Finametrica and Dynamic Planner enabled advisers to build their own model portfolios for the first time, creating a centralised investment proposition in the process. The old world of a ruler and copy of Money Management was thankfully consigned to history. 

A few years later in July 2012 the FSA (as they were back then) published probably my favourite ever regulatory paper – the stone-cold classic that is FG12-16: “Assessing suitability: Replacement business and centralised investment propositions”.  Do you have a favourite regulatory paper? Do let me know if you do. 

Anyway, if the replacement business part of this paper wasn’t exciting enough (and it was), this finalised guidance cemented the use of centralised investment propositions (CIPs) in most advice firms. Over the last decade our State of the Advice Nation (SOTAN) research has consistently shown that over 90% of firms are running CIP. 

CIP adoption has remained constant, but the investment solutions used within them has evolved. Driven by services such as U-Select, Finametrica etc, in-house model portfolios being run on an advisory basis used to be almost ubiquitous, however things have flipped around. Over recent years SOTAN has tracked a shift away from in-house models to outsourced discretionary MPS with our most recent research showing this is now the most common way advisers are placing investment business. On the provider side we currently estimate that a quarter of total AUM held via advisory platforms are investing into discretionary MPS portfolios, and we track over 50 MPS providers via our Analyser research tool.  

This growth has not gone unnoticed by the regulator, who have recently kicked off their review into the MPS market. Findings are due to be published towards the end of 2026, but it does appear to be very much focused on the provider side of things and in particular how aligned (or not) these MPS services are with Consumer Duty regulations. Clear target markets, ensuring fair value, and consumer understanding are all likely to come under the spotlight. 

Consumer Duty also requires all firms to ensure they avoid foreseeable harms. This is one area where I think the MPS market can improve, especially with regards to the detail of how portfolios are managed across multiple platforms. Settlement periods, pre-funding of trades, cut-off points, corporate action approaches and cash minimums are several areas which potentially will impact the outcome investors receive. I know of several MPS providers who conduct due diligence on the platforms they work with to assess these points, as well as the overall total cost of investing. This feels like sensible good practice the wider industry should be adopting. 

For advisers it doesn’t appear that there will be any direct impacts from the review, however there is a clear direction of travel aligned to Consumer Duty. I would encourage any firm using outsourced MPS solutions to be sharper in how they assess providers, document suitability, understand costs and monitor whether the proposition remains appropriate for the client segments it is meant to serve.  

There is a broader point here too. For all the talk of innovation, scale and efficiency, when looking at providers the regulator keeps coming back to the same basic question: what is the client actually getting, and is the price they pay reasonable when set against that benefit? In many ways, the MPS review is simply the latest expression of that much wider Consumer Duty value challenge. Fancy governance diagrams and beautifully written committee papers will not be enough on their own, firms will need to evidence good outcomes. For providers that have already done the hard yards on due diligence, oversight and client communications, this review may be more reassurance than reckoning. For others, it could be a rather uncomfortable reminder that growth stories only stay attractive if customer outcomes keep pace. 

And to close, I am very much looking forward to seeing Pixies at Royal Albert Hall tomorrow night. Got me a movie…