Building a Centralised Investment Proposition: A Framework for UK Advice Firms

Why This Is Harder Now Than It Was

Five years ago, a CIP was an investment committee document that most advisers could describe in a sentence. Under Consumer Duty, it is the spine of how the firm demonstrates fair value, consistent suitability, and good outcomes at scale.

The shift is not rhetorical. The FCA’s finalised guidance FG12/16 still frames the core expectations, but the evidential standard has been raised by Consumer Duty and by the four outcomes it requires firms to demonstrate. A CIP that was acceptable in 2022 may now be the source of an adviser firm’s biggest compliance risk.

This is a framework for building one that holds up.

What a CIP Is (And Is Not)

A CIP is a documented, firm-wide approach to investing client money. At a minimum it sets out:

• Which client segments the firm serves and how it defines them
• The investment philosophy the firm will apply across those segments
• The delivery mechanisms used (in-house portfolios, fund panels, MPS, DFM, bespoke)
• The governance and oversight structure that makes sure the proposition is applied consistently
• The review cycle and the triggers for change

It is not a marketing document, not a fund panel on its own, and not a one-off compliance exercise. It is a description of how the firm actually makes investment decisions for clients, written so another adviser picking up the file can continue the work consistently.

The Six Components of a Credible CIP

1. Client segmentation that means something

A CIP must start with a clear articulation of who the firm serves. Generic segments (mass affluent, HNW, UHNW) are a starting point, not a finish line. The useful version defines segments by investable wealth, complexity, liquidity needs, time horizon, and the level of service the firm commits to each.

Segment	Typical investable assets	Complexity	Service commitment	Default solution
Core	GBP 250k to 1m	Low	Annual review, platform-based	MPS on panel
Established	GBP 1m to 5m	Moderate	Semi-annual review, financial planning	DFM MPS or bespoke MPS
Private	GBP 5m+	High, often multi-generational	Quarterly review, full family office touchpoints	Bespoke discretionary or MFO

Every client record in the CRM should map to a segment. The CIP then describes the default route for each segment and the circumstances under which a client should sit outside it. This is the foundation that connects to what HNW clients actually want from their adviser.

2. An investment philosophy the firm genuinely holds

This is not a paragraph from a fund manager’s deck. It is the firm’s stated view on the things that actually shape portfolios:

• Active versus passive, and when the firm uses each
• Strategic asset allocation approach, and the assumptions behind it
• Attitude to alternatives and private markets
• Position on ESG, impact, and sustainability
• Rebalancing policy and tax-aware management
• How risk is defined and measured

A firm that cannot articulate its philosophy in two or three pages is a firm that will make inconsistent decisions across advisers. The document is the spine that supports consistency as the firm grows.

3. Delivery mechanisms, matched to segments

The CIP must state how investment is actually executed for each segment. The options are familiar; the discipline is in matching them rigorously.

Mechanism	Typical use case	Key oversight burden
Adviser-led fund panel	Smaller Core-segment clients, simple needs	Fund panel governance (see below)
MPS on platform	Core and lower Established	MPS provider due diligence and performance oversight
Bespoke MPS	Mid-Established	Bespoke design rationale, ongoing monitoring
Discretionary fund management	Higher Established and Private	DFM selection, periodic re-review
Bespoke discretionary	Private with specific needs	Mandate design, reporting, relationship reviews

The choice between MPS and bespoke portfolios and between advisory and discretionary mandates should be explicit at the segment level in the CIP. A client outside their segment’s default is an exception that must be documented and justified.

4. Fund and manager selection: the panel that underpins the proposition

Every mechanism that relies on fund selection requires a documented research process. The standards here are well-established and sit inside the CIP: a clear universe, transparent screening criteria, evidence gathering on the shortlist, and a written rationale for every inclusion. This is covered in detail in fund due diligence for wealth advisers; the CIP’s role is to state how often the panel is reviewed, who reviews it, and what governs additions and removals.

For firms delegating to a DFM, the equivalent work is due diligence on the DFM itself. The CIP should name the DFMs used, the segments they serve, the evidence reviewed at selection, and the ongoing monitoring cycle.

5. Governance that actually governs

An investment committee with minutes that record attendance but not decisions is not governance. A credible CIP governance structure has:

• A defined investment committee with named members, roles, and quorum rules
• A meeting cadence (quarterly at minimum for most firms)
• Standing agenda items: performance review, panel changes, regulatory updates, exceptions approved, clients outside segment
• Decision logs that record not just what was agreed but the evidence considered
• A clear escalation path for intra-meeting decisions
• An annual self-assessment of the proposition’s effectiveness

The FCA Handbook COBS 9A and the product governance rules in PROD 3 and PROD 4 are the regulatory backbone of this work.

6. Review cycle and change control

A CIP is a living document. Three cycles operate in parallel:

• Quarterly: performance monitoring against benchmarks and peer groups, fund watchlist review, exceptions log
• Annually: full proposition review, segment boundaries, philosophy check, governance effectiveness
• Event-triggered: regulatory change, material manager or provider change, firm strategic change

Change control matters. Changes to the CIP must be documented, approved at the right level, and communicated to all client-facing staff. A CIP that changes informally between adviser conversations is not a CIP.

The Consumer Duty Bridge

Consumer Duty does not introduce new CIP requirements so much as it demands the CIP work in a way that produces evidenceable outcomes. Each of the four outcomes ties to a CIP component.

Consumer Duty outcome	What the CIP must evidence
Products and services	That each proposition is designed for a defined target market and the firm monitors fit
Price and value	That charges at each layer (funds, DFM, platform, advice) deliver fair value for the target market
Consumer understanding	That clients in each segment receive communications appropriate to their level of investment sophistication
Consumer support	That service commitments stated in the CIP match what is actually delivered across the book

The piece that commonly fails is the price and value assessment. Layered charges (fund OCFs, DFM fees, platform charges, adviser fees) produce total costs that are sometimes indefensible when examined end to end. The CIP should include, or reference, the annual fair value assessment that makes this examination.

For more on the operational side of Consumer Duty, see Consumer Duty one year on, what wealth advisers must do now.

Documentation That Passes a Supervisory Visit

A CIP document that reads like a description of how the firm worked five years ago is a warning sign. What a supervisory reviewer looks for:

1. A dated, version-controlled document owned by a named individual
2. Cross-references to the fund panel, DFM panel, and platform panel, all under equivalent review cadences
3. Meeting minutes for the last 24 months that show decisions, not just attendance
4. Exception logs showing clients who sit outside their segment’s default and why
5. Evidence that the investment team has read and accepted the current version
6. A fair value assessment, dated within the last 12 months
7. Records of communication to advisers when the CIP changed
8. Management information on how often clients are actually placed in their segment’s default solution (if the number is low, the CIP is notional rather than real)

Keep the main CIP document under 30 pages. Everything longer should be an appendix or a cross-reference. Supervisory reviewers read CIPs; they do not wade through them.

Common Failure Modes

The shelfware CIP. Written to pass a thematic review, filed, never referenced. Detectable within five minutes of conversation with advisers who cannot describe it.

The marketing CIP. A beautifully designed document that tells clients what the firm believes but says nothing about the delivery mechanism, governance, or review. Useful for client meetings, insufficient for supervision.

The default that nobody uses. The CIP names an MPS as the default for Core clients; in practice, 70 percent of Core clients are in DFM arrangements because advisers prefer the commission structure or the client relationship. The CIP and reality have diverged; either the CIP or the practice must change.

Governance by copy-paste. Committee minutes that use the same sentences quarter after quarter. A sure sign the governance is theatrical rather than substantive.

The unassessed outsourced relationship. DFMs on the panel for five years, never re-tendered, never benchmarked, and increasingly expensive relative to alternatives. The CIP lists them; the oversight has lapsed.

Why a Credible CIP Affects Enterprise Value

A CIP that is documented, applied, and defensible is one of the characteristics that makes an advice firm attractive to acquirers. A prospective buyer performs the same exercise a supervisory reviewer would: do the advisers know and apply the proposition, is the governance real, and is the client book in the solutions the CIP describes?

A firm whose CIP exists in partners’ heads rather than in writing, or whose book is scattered across legacy solutions that predate the current proposition, typically trades at a discount because the remediation risk is material. Firms that have invested in building, applying, and maintaining a credible CIP earn a multiple premium that repays the effort several times over.

A Pragmatic Sequence for Building or Rebuilding One

1. Map the current state honestly. What solutions are actually in place for which clients? How much of the book sits in the CIP’s current default for its segment?
2. Define or redefine the segments using the firm’s real client data, not a theoretical model.
3. Write the investment philosophy. Keep it to three pages. Have every adviser read and agree.
4. For each segment, pick the delivery mechanism that genuinely fits, and document the rationale.
5. Review or rebuild the fund panel, DFM panel, and platform panel. Bring each under the same governance cycle.
6. Stand up (or refresh) the investment committee with a real charter and a published cadence.
7. Conduct a current-state fair value assessment across all layered charges, by segment.
8. Produce the CIP document and circulate it to all client-facing staff for acknowledgement.
9. Migrate any clients outside their segment’s default, with documented advice, over the next 6 to 12 months.
10. Set review cadences and hold the first quarterly committee within 90 days.

This is at least 12 months of work for most established firms and much of the first year of operation for new ones. The payoff is a firm that operates consistently, meets Consumer Duty expectations at the level the FCA now expects, and carries a genuinely saleable investment process.

The Standard Is Now Coherence, Not Just Competence

A competent adviser making sensible individual decisions no longer clears the bar. The regulator, the client, and the eventual acquirer all want to see the same thing: a coherent, documented, applied investment proposition that produces consistent outcomes across a book of clients.

Building one is not quick. Maintaining one is a discipline. The firms that do it well treat the CIP as the operating system of their investment function, and the FCA Register over time separates the firms that take this seriously from those that do not.