The Wealth Mosaic Talks To Daryl Roxburgh of BITA Risk about Better Controls & Management Processes

Wealth Mosaic
Wealth Management

In this series, we interview senior executives from leading wealth management firms, solution providers and WealthTech influencers to learn more about them, their journey, their perspectives on the market, and how they see the future of wealth management.

For this issue of The Wealth Mosaic Talks To (TWMTT), we talked to Daryl Roxburgh, President and Global Head of BITA Risk ®, part of the corfinancial® group and asked him to share his view on why, in today’s market, investment managers and firms need to consider dispersion of returns and evidencing the broader benefit they deliver to their clients in terms of overall value. 

Before we start, could you share a bit more about yourself and your career to date?
I’m head of BITA Risk. I started my career as a private client fund manager, before taking up managerial roles in Credit Suisse in the nineties. I then spent two years at M&G, before I was recruited by Prudential Portfolio Managers as Global Head of IT in 1998. My expertise lies in portfolio construction, analytics and risk solutions for the quantitative, wealth management, and private banking markets.

What are the current issues, generally, that wealth management firms face around control and insight?
Wealth management firms today know that the FCA is likely to become far more prescriptive in its demands; it is looking to see that customers are not being exposed to inappropriately high-risk or complex instruments in the investments that they make while having consistent returns and fair value.

That means that firms must be able to demonstrate a daily understanding of where portfolios are relative to their mandate. To do this effectively, wealth managers need sophisticated and effective controls, and a greater level of management information in place. Having these controls in place will keep them more informed and aware of the level and sources of potential risk in a client’s investment portfolio – foreseeable harms – as well as returns-outcomes.

To efficiently manage a book of client portfolios, managers need an exception-based dashboard which gives them the ability to hone in on any areas that need immediate attention.

Why is this an issue now?
The FCA is constantly discussing the need to prevent consumers from being sold or recommended products and services that are of poor value, and is consistently advocating the need for wealth management firms to shift to an investment model that is built on best practice and evidence based. As a result, wealth managers are introducing more robust monitoring systems to spot issues, evidence that they are treating their customers well, and are firmly focused on delivering on the best possible all-round outcome to their clients.

How can firms best address this issue on a high level?
I think value can be measured in a number of different ways, in terms of meeting the clients’ objectives for risk and return. For example, a fund manager does not need to be constantly turning over a client portfolio to add value. But they do need to be continually assessing whether the portfolio’s components are the right ones and are in line with the defined investment mandate – that means carrying out the right level of oversight and review on a systematic basis. The fund manager’s focus very much needs to be on anticipating foreseeable harm and increasing standards overall as well as performance dispersion.

What would this look like at a granular level?
Firms need to break down the causes of performance dispersion to understand the risks inherent in the portfolio. They also need the means to manage and resolve risk and foreseeable harm-related issues. This implies a governance structure that is effective, non-conflicted, and with appropriate controls in place to steer a course back to the provision of best outcomes and customer value, when and where needed. It also means testing consumer understanding and ensuring they fully understand all aspects of their investment products and services. This can be done only if the portfolio manager clearly understands the customer’s needs, risk profile, and circumstances – including whether they are deemed vulnerable or not, according to the FCA’s definition of vulnerability.

Most firms are already focused on reducing harm and increasing their standards of service, but others are still playing catch up purely because they have a culture where they have, in the past, given their investment managers a lot of freedom with limited control frameworks or structures in place. They ae now obliged to apply something more robust than they have done in the past in terms of risk analysis and controls.

How does this feed into fair value and Consumer Duty?
Providing fair value means the amount paid by customers is reasonable relative to the benefits they realise from their investments. The investment manager must also ensure they deliver ongoing review/advice and do not overtrade, provide clear disclosures on fees and charges, deliver overall value to the customer and, finally, make required changes if and when issues around poor value are identified.

The aim is for wealth managers to have a circular process of defining the investment outcome their client expects, putting controls in to monitor progress against that outcome, and then analysing whether they achieve that outcome.

In this context, outcome management is an ongoing and iterative process; it does not look at the portfolio only at the end of a given year and says it is slightly below the expected return. Rather, an ongoing process that is focused on outcome management is more about monitoring a portfolio against various measures throughout the year to ensure that investment targets are met by the end of a given year.

For those investment managers who choose stocks on a fundamental analysis basis, quantitative methods and metrics, such as risk, will bring additional insight to their process. So I think this is now about having alerts and prompts in place to look at a portfolio such that the investment manager has a comprehensive and informed view of the underlying risks, and is comfortable taking calculated risks because they are aware and informed of when and where intervention might be needed to maintain a focus on consistently providing fair value to their client.

Key takeaways 

  • Quarterly sampling of portfolios for peer reviews is no longer enough.
  • Manual, spreadsheet-driven, Management Information has single points of failure and is labour-intensive, and unlikely to be timely.
  • A framework of metrics is needed to drive consistency of outcomes without rebalancing to model, and even rebalancing throws out outliers that should be monitored.
  • Managers having a view of their own alerts, enables rapid reaction and resolution, rather than passing down monthly reports.
  • Risk management is about a strong investment process, not just regulation.

Responsible Investing – Putting Theory into Practice

Financial data sets

This article follows an assessment of Responsible Returns – Meeting Client Utility, seen here. BITA Risk® part of the corfinancial® Group, considers how to put all the theory around Responsible Investing into practice.

In the last article, we looked at maximising the client utility through using ESG data to aid the investment process through avoiding risks and seeking opportunities, incorporating client preferences in portfolio management, and stewardship. Being able to illustrate this to the client is key, through portfolio centric reports demonstrating the application of these processes to their portfolio. The key to success, is bringing together six sets of data within a single system, to maximise the use of each data set and the value that it can create, while reducing manual processes and re-keying.

  • One or more data vendor services
  • The firm’s investment and RI narratives at issuer level
  • The firm’s voting and active management actions
  • The firm’s screening criteria
  • Client preferences
  • And every portfolio’s positions

This applies, regardless of the firm’s chosen taxonomy and data vendors, and indeed should support multiple ones allowing reporting across TCFD, SDR, SFDR, SDG, SASB and PLSA, as appropriate and required.

BITA Risk’s ESG Manager delivers on the need collate this data, to provide robust, detailed and easy to understand responsible investment analytics at holding and portfolio level.

For the Central Investment Team, it provides model portfolio and research list, on-going monitoring against specified criteria as well as detailed exposure and what-if analysis. Regulatory TCFD reports are on-demand for all portfolios at any date, as are exposure trend reports. Asset narratives can be loaded for use in reporting across client portfolios, as well as disseminating information to investment managers.

ESG risk and opportunity analysis can be reported for any portfolio, including models and recommended lists, and not only be reported on at a point in time, but monitored on a daily basis with exception reporting.

To aid clients, preferences can be recorded to match either to a pre-determined set of screening criteria, or client specific requests. These typically align with the data vendors metrics, enabling both a great depth of granularity, as well as standard definitions of the preferences aligned to the ESG, ethical, product exposure and climate change data. For example, IMs in one of our charity focused investment managers can select from over 400 metrics when aligning client requirements.

Not only are these preferences recorded as structured data that can be shared with order management and reporting systems, but the client portfolios are monitored for conflicts with them daily, along with exception reporting.

It automatically applies the following data sets to the holdings of any client portfolio; one or more ESG and carbon data services, the firm’s own scores and narratives and the firm’s voting and active management actions. Combining this with firm’s central screening criteria and client preferences in on-going monitoring, provides powerful insight, automated checks and controls, as well as valuable reporting.

We are currently working on the collation of data on a firm’s voting and stewardship activities, which will then be applied to a client’s portfolio on the basis of activities relating to assets held during the reporting period, further demonstrating a firm’s capabilities.

BITA Risk’s ESG Manager delivers ESG, Ethical Restriction, and climate data, management and reporting tools to IMs, demonstrating a firm’s Responsible Investment approach as applied to each client portfolio. In this way, we feel the tools to mitigate ESG risks, seek ESG opportunities, personalise the portfolio, and demonstrate the firm’s stewardship role are delivered, helping improve client communication and maximise their utility.

If you would like to discuss any of the points raised here, please contact us at or see more information on our solution here.

Responsible Returns – Meeting Client Utility

ESG and financial balance

This article follows a high-level assessment of Responsible Investing by Daryl Roxburgh, seen here. In aiming to maximise client utility, BITA Risk® part of the corfinancial® Group, considers three key questions associated with the challenges of implementing Responsible Investment: 

  1. There has been much debate as to whether ESG is good or bad for performance. ESG is a very broad set of disparate metrics and like any other metric for assessing investments, they are useful, but will not be applicable for all sectors all of the time in terms of driving performance – How can they be best used?
  2. The balance required between achieving return and meeting responsible objectives varies significantly across clients, as does personal perception as to what a responsible objective is. From a wealth manager’s perspective, this could become a logistical nightmare, but it does not need to be – How can these preferences be managed?
  3. Many firms have thought long and hard about ESG and have created considerable research and insight. This creates a positive point of differentiation for the fund manager, as long as this is demonstrated to the client – How can this be capitalised upon?

Investors, particularly younger ones, now hold ESG standards to be as important as performance; a recent survey by asset management firm Amundi and the Business Times found that 82% of Gen Z and close to two-thirds of young millennial investors have exposure to Environmental, Social and Governance (ESG) investments. Combined, Gen Z and Millennials account for 43% and 49% of the US and global population, respectively.

This trend is only set to continue, particularly as more wealth transfers to these cohorts.

The adoption of SFDR disclosure regulations in the EU has also helped to move awareness up the agenda. Fund managers are required to disclose how sustainability risks are considered in the investment decision-making process.

The International Institute for Sustainable Development sees the market for ESG-mandated investments reaching U$160 trillion by 2036, rising significantly from U$30 trillion in 2018.

But how can fund managers actually demonstrate that they have woven ESG and climate factors into their research processes and considered them in the same way that they would incorporate things like risk and suitability?

The key, we think, is to support the investment manager and client and make a good outcome more likely by putting in place a robust analytics and tracking system. This should focus on the ESG factors of a portfolio together with traditional risk and fundamental analytics, in the context of the client’s risk and suitability profile and financial objectives.

We think of this in three processes and report sections, which will drive investment returns and meet client objectives, as well is improving client communication and demonstrating the actions of the firm.


One: Risks and opportunities:

A firm should determine which ESG factors are considered as risk and opportunity signals – and this will vary by sector. In many cases, these are already embedded in the investment selection process. Their use should be extended into an ongoing process making use of data monitoring and management to provide individual client portfolio reviews and warnings, if an investment’s score has changed or there is a conflict with the client’s mandate. This should equip the investment manager to demonstrate to the client how the firm’s responsible investment process has been applied to risk management and return generation within their portfolio. This also adds the ability to flag any issues and take evasive action as soon as possible – again this comes down to being able to show that the best outcome was sought in good time for the investor.

Indeed, ongoing testing of ESG factors against the client mandate alerts to foreseeable harm that can be mitigated or documented.

Through identifying and managing these return risks and opportunities and reporting a firm’s view of individual investments in the context of the client’s portfolio, the firm demonstrates a true value add and improves the investment narrative for the client.


Two: Personal preferences:

The demonstration of the firm’s approach to responsible investment will partly mitigate the challenge of too many client-specific preferences. Where clients require further restrictions, these should be precise and confirmable and link to the metrics that a firm can access. This structured data could then be used to automate portfolio reporting and monitoring against the client preferences and provide checks and balances in the investment process.

ESG reporting should be more than a compilation of figures and measurements. There must also be context around ESG efforts to provide perspective to the client. By recording preferences in this way, the narrative could be focused on the client’s particular interests.  Adhering to an existing ESG framework is important at this stage, as it provides guidance and best practices for how the organisation should structure and convey the report and its data.

By following basic steps around data capture and careful matching of client ESG needs, the investment manager would gain much better insight into the client’s needs and objectives and could measure against those parameters at any time.


Three: Stewardship and actions:

Being able to successfully show how ESG data has been incorporated into the investment process, which, together with client preferences are monitored on an on-going basis, could only be positive for the wealth manager’s reputation. The next step is demonstrating the firm’s active investment approach. What has it done to push responsible agendas within the invested companies, how has it voted and been active.

This third process and report section, really underlines the wealth manager’s commitment to responsible investing. By relaying to the client what actions the firm has taken in respect of investments the client has held, would further strengthens the investment narrative.

However, it also has another positive effect; that of influencing positive change within the corporate world. Indeed, the influence of any wealth manager is not to be underestimated and can act as a force for change – companies that do not behave in line with expectations can expect disinvestment and suffer financial loss as well as damage to their reputation. That is no laughing matter! Think Uber – it has fallen out of favour due to numerous accusations of sexual harassment and discrimination within the company, as well as negative attention over the poor treatment of drivers. VMware meanwhile saw its reputation dip, off the back of a lawsuit alleging fraud and financial impropriety and sexual harassment. And Boohoo’s reputational damage has been intertwined with concerns about the company’s business practices and labour conditions at its suppliers.

Ultimately fund managers that want to be successful into the future need to equip themselves with the right data, tools and reports to accurately describe both the firm’s integrated approach and implementation of the client’s parameters when it comes to Responsible Investing. They need to be able to prove investments match that on an ongoing basis. Doing so requires a systematic approach, accurate data and dynamic tracking so as to be able to demonstrate that the Responsible Investing was taken care of as much as the Return on Investment. In doing this, the firm would add to the client utility through Responsible Investing, rather than just meeting regulatory targets.

If you would like to discuss any of the points raised here, please contact us at or see more information on our solution here.

Our final piece on this topic, Responsible Investing – Putting theory into practice, will reflect on how companies can resolve many of the requirements raised in this article.

The impacts of TCFD on the wealth management space

Climate-related financial risks

In recent years, there has been growing recognition of the importance of climate-related risks and opportunities for the financial sector. The Task Force on Climate-related Financial Disclosures (TCFD) has emerged as a crucial framework that enables organisations to evaluate and disclose their climate-related financial risks. This article aims to explore the impacts of TCFD on the wealth management space, highlighting how BITA Risk can assist wealth management firms in navigating this evolving landscape. 

The TCFD was established in 2015 by the Financial Stability Board (FSB) to enhance transparency and improve the understanding of climate-related risks and opportunities in the financial sector. The framework provides recommendations for voluntary, consistent climate-related disclosures across four key areas: governance, strategy, risk management, and metrics and targets.
Impacts of TCFD on wealth management

Enhanced risk assessment and management
With the TCFD framework, wealth management firms gain a structured approach to identify, assess, and manage climate-related risks. By integrating climate risk considerations into their investment decision-making processes, firms can more effectively safeguard their clients’ investments against climate-related threats. TCFD-aligned disclosures provide investors with the necessary information to understand and evaluate the potential impact of climate risks on their portfolios.

Investor demand and preferences
As climate change gains increased attention, investors are increasingly interested in aligning their investments with sustainable and climate-conscious strategies. According to a 2020 survey conducted by Morgan Stanley, 85% of individual investors expressed interest in sustainable investing. TCFD-aligned reporting allows wealth managers to meet this demand by providing transparency and evidence of their commitment to sustainable investing practices. By doing so, wealth management firms can attract new clients, retain existing ones, and stay competitive in an evolving market.

Regulatory landscape 
Regulators worldwide are actively incorporating TCFD recommendations into their policies and regulations. For instance, the European Union’s Sustainable Finance Disclosure Regulation (SFDR) requires financial market participants to disclose the integration of sustainability risks, including climate risks, into their investment decision-making processes. Similarly, other jurisdictions are following suit, creating a global push towards climate-related financial disclosures. Compliance with TCFD recommendations positions wealth management firms favourably in meeting evolving regulatory requirements.

Long-term value creation
By integrating TCFD into their operations, wealth management firms can unlock long-term value-creation opportunities. Climate change can impact asset valuations, profitability, and business models across industries. Through TCFD-aligned disclosures, wealth managers can identify investments that are well-positioned to capitalise on the transition to a low-carbon economy. By focusing on companies with sustainable practices, wealth management firms can generate positive returns for their clients while aligning with broader environmental objectives.

BITA Risk: assisting wealth management firms
BITA Risk, a leading provider of risk management solutions, offers comprehensive tools to support wealth management firms in complying with TCFD recommendations and navigating the associated challenges. Here is how BITA Risk can assist:

1. Climate risk analytics:
BITA Risk provides analytics to assess climate-related risks across investment portfolios. By leveraging vast amounts of climate and financial data, the platform enables wealth managers to identify and quantify the potential impact of climate risks on investment returns. These insights empower wealth management firms to make informed decisions, optimise asset allocation, and mitigate risks associated with climate change.

2. Scenario analysis:
BITA Risk’s platform enables wealth managers to conduct scenario analysis, a critical component of TCFD recommendations. Scenario analysis helps firms assess the resilience of their investment portfolios under different climate-related scenarios, such as transition and physical risks. By stress-testing portfolios, wealth managers can identify vulnerabilities and adjust their strategies, accordingly, ensuring the long-term resilience of their clients’ investments.

3. Reporting and disclosures:
BITA Risk offers reporting capabilities that facilitate TCFD – disclosures aligned with the CET and IA templates. The platform generates comprehensive reports that highlight climate-related risks, governance frameworks, and sustainability strategies. By streamlining the reporting process, wealth managers can efficiently produce high-quality disclosures that cater to the evolving needs of regulators, investors, and other stakeholders.

The TCFD framework has significantly influenced the wealth management space by fostering improved risk assessment, meeting investor demands, navigating regulatory requirements, and driving long-term value creation. Wealth management firms can leverage solutions like BITA Risk to effectively implement TCFD recommendations. By embracing the TCFD framework and incorporating climate-related considerations into their operations, wealth management firms can enhance their risk management practices, attract clients, and capitalise on the opportunities presented by the transition to a sustainable, low-carbon economy.

If you would like to discuss any of the points raised here, please contact us at or see more information on our solution here.

Reporting on responsible investing, ESG, ethical, carbon and stewardship – Why do you need it?

Responsible investing, ESG, ethical, carbon and stewardship

Daryl Roxburgh – President and Global Head BITA Risk®, part of the corfinancial® Group, investigates reporting on responsible investing, ESG, ethical, carbon and stewardship, why do you need it and how do you do it?

Responsible Investing (RI) reporting by private wealth managers is rising in importance as society as a whole takes more interest in how invested companies behave, their impact and what they, as investors, can do to influence them. Expectations around behaviour regarding these issues have risen exponentially in the recent past, and so has the general understanding of climate change risks. As a consequence, wealth managers need to describe and demonstrate that they are seeking positive change through RI and minimise their Environmental, Social and Governance (ESG) risks.

As interests rise, so too have the terminology and the metrics to measure RI. Within the financial domain, this has been driven by investors and regulators, as well as companies themselves, who recognise that a successful future is inextricably linked with all the elements of RI. Indeed, in many cases, client utility is not just linked to investment performance; it is also linked to RI.

BITA Risk thinks of RI – and therefore, management and reporting – in four groups:

  1.  RI risks – identifying which portfolio investments face risks due to climate change, social media, and environmental taxes. This may also include ethical exposures in controversial areas and general involvement in controversies. Climate change and carbon metrics fall into this group too.
  2. RI opportunities – whether new emerging technologies to counter or adapt to climate change or existing products and services that can easily adapt.
  3. Client preferences – the things that are particularly important to the client. Whereas points one and two above are a fundamental part of investment management, client preferences are an additional layer and may cover ESG, ethical and product factors as both positive and negative screens.
  4. Stewardship – what is the wealth management firm doing to demonstrate its active role in driving the issue of RI in the firms invested in. This demonstrates value add.

This data needs to be at the investment manager’s fingertips for a client portfolio to make it an integral part of the investment process, as well as in reporting.

Most, if not all, investors would like to have ESG and RI data and measurements included as a standard part of the reporting process woven through it, like with other metrics. This is particularly pertinent when it comes to the next generation of investors who consider RI performance to be on par with performance – and rightly so.

The regulator, too, is another key driver of ESG reporting. The EU implementation of the Sustainable Finance Disclosure Regulation (SFDR) in March 2021 effectively created three fund designations (Article 6, Article 8, and Article 9) based on the level of the investment manager’s incorporation of ESG characteristics in the investment decision-making process. This is matched in the UK by SDR and TCFD, which brings a detailed level of carbon and climate reporting. These regulations require certain disclosures from investment managers about the implications of sustainability risks on both their funds and firms.

The dovetailing in demand from investors and regulators alike has led to vast improvements in RI metrics and frameworks to at least attempt a common set of standards that is meaningful to all and means that investment management companies are comparing like with like when it comes to different companies and match that to investor profiles. What has to be remembered is that ESG assessments are aligned with the research methodology of a data vendor, and these are 1) not necessarily the same, and 2) when aggregating detailed factors up to an overall score, the weighting and methodologies can be very different. So, it should not be surprising when different vendors have different scores, they may not be measuring the same thing.

Indeed, RI represents an opportunity for investment management firms to distinguish themselves from competitors and provide something meaningful and actionable to their clients. Alignment with client goals as well as risk and suitability frameworks are key, making investment returns and RI crucial going forward.

Getting ESG reporting right is important. It affords investment managers the chance to enhance their investment decision engine, fine-tune customer reporting capabilities, and augment their internal stewardship processes to meet and potentially exceed client expectations. RI of all types is needed in increasingly equal measure and a robust reporting tool is crucial! In our second article in this series, we will look at how to make this work in practice, dealing with data and giving investment managers the key tools.

If you would like to discuss any of the points raised here, please contact BITA at or see more information on our solution here.

Consumer Duty – how BITA Risk can help

Wealth Management

Getting good client outcomes should not be down to luck, but the result of following a defined data analysis and exception management process to test outcomes against targets and act on alerts to potential outcome spoilers.

Following our recent article on Consumer Duty – seven steps for successful outcomes, Daryl Roxburgh – President and Global Head BITA Risk® part of the corfinancial® Group presents how BITA Risk helps firms address Consumer Duty demands.

Getting the right outcomes should be the result of following the core principles that makeup Consumer Duty. 

Understanding the client
This means looking at the client’s affairs from more than just a risk and suitability standpoint. True understanding of the client means looking at multiple aspects considering: risk, objectives, constraints, capacity for loss, knowledge and experience, and ethical and ESG preferences. In some cases, this will require a degree of investor education. BITA Wealth Profiler® provides the ability to map the client profile and match it to the firm’s investment proposition. Ongoing monitoring and automated proposals should follow; all data should have been integrated and analysed to reach that point and the risks of the proposed investments would be fully explained.

Foreseeable harm
Foreseeable harm should be considered at the overall portfolio and individual investment level. Harm can be considered as causing the portfolio to miss the client’s objectives, very often measured against the firm’s central investment model or a defined benchmark. BITA Wealth Monitor® helps mitigate foreseeable harm through continual automated assessment of positions and portfolios, along with where the risks are acceptable. Quantitative risk checks at portfolio and asset level, portfolio construction and investment policy tests, pre and post-trade, alert the user to exceptions on every portfolio, every day, not just a random periodic sample. Where there is a known reason for the exception this is documented in the system, providing a full audit trail. With over 50 tests available in BITA Wealth Monitor, including value, there is coverage for a wide range of investment approaches.

Consistent outcomes
The use of BITA Wealth Monitor to mitigate against foreseeable harms has been proven to lead to greater consistency of performance outcomes. The extension of the Monitoring suite and analytics to performance and ex-post risk analysis enables insight and understanding of systemic issues within the client base, such as outlier portfolios, managers, mandates or groups of clients.

Early risk and deviation identification allow for early action. BITA Wealth manages all of this at a granular level, with standard reasons and free text justifications making up actionable structured data.

Management information and oversight
Finally, getting all the data analytics together to be able to understand the client, provide consistent outcomes and identify foreseeable harm means that managers glean greater insight. This can be in terms of client vs peer group and model, performance and risk analysis, or manager vs peers, risk and return analysis. It requires daily, enterprise-level monitoring of portfolios across all foreseeable harms for all businesses, locations, teams and managers and makes for a better level of costs and charges review across the client base.

Using BITA Wealth gives consistency of client assessment and means matching to the investment proposition is much more accurate. This together with the ongoing portfolio monitoring BITA Wealth provides, should lead to consistent client outcomes within an expected range that are relative to the benchmark as well as recorded explanations where there are factors that might prevent a positive outcome. In this way, managed data leads to delivered Consumer Duty.

If you would like to discuss any of the points raised here, please contact us at or see more information on our solution here.

Consumer Duty – seven steps for successful outcomes

Steps for success

By Daryl Roxburgh – President and Global Head BITA Risk® part of the corfinancial® Group

Wealth Management

Consumer Duty is in the post – and due imminently! The deadline for new and existing products or services open to sales or renewals is 31 July 2023, with closed products and services coming under the rules at the end of July next year. 

As with any new regulation firms will need to cope with an array of demands and challenges. It can feel overwhelming. But successful implementation actually makes for better business, better efficiency, and positive outcomes.

Getting the right outcomes should be the result of following the core principles that underlay Consumer Duty

  1. Understanding the client
  2. Foreseeable harm
  3. Consistent outcomes
  4. MI & oversight

The end result should be the ability to provide a better match of client and investment and the delivery of an investment outcome in line with expectations. Ongoing monitoring of portfolios should mean consistency when it comes to achieving expected outcomes or returns. And if it looks likely that something might impact that outcome then the monitoring will allow for early action and record what action was taken.

The provider also needs to tell their customers when they have something better or more suitable in their portfolio – and facilitate a switch if required.

Obviously, this entails work on the part of the provider to make sure that process efficiency and data analytics are powering the proposition forward as they should be. Getting that right makes it more likely that the investment choice is the right one in the first place. The monitoring meanwhile makes sure that outcomes for all investors are as close to expectations as they could be. None of this is easy but getting it right goes beyond compliance; a happy customer with a positive outcome is a returning customer which is good for business!

However, this array of positive outcomes will not happen by accident. Indeed, it needs to be designed into processes to make sure that a firm is both compliant and forward-looking. Much of this relies on proper data management and analytics – the devil is always in the detail!

The key, we think, is to support the client and make a good outcome more likely by having in place a robust tracking system, focusing on the investment management of a portfolio. This should provide warnings if something is not as expected and requires investigation so as to steer a better course in good time and provide that much-lauded good outcome for the client.

This may all sound like common sense, but it relies on having the right data and processes in place. Below we outline the seven steps that we think are key to getting an optimum outcome testing regime in place.

The seven-step process

1. Define the outcome:
Information on a client’s requirements for a particular portfolio can be assessed and used to match the client into the firm’s investment proposition. Factors can include attitude to risk, portfolio objectives, capacity for loss and other factors such as sustainability, liquidity and time horizon.

The combination of these factors defines the parameters for the expected outcomes and provides the guard rails for monitoring. All of this should be played back to the client in the investment proposal, to see if it meets their understanding.

The proposal then becomes an outcome checkpoint that can be referred back to.

2. Apply a set of objective and consistent tests relevant to that outcome:
The tests that check whether the portfolio is within the guard rails fall into two groups, leading indicators, and ex-post indicators.

Leading indicators look at how a portfolio is constructed and are essentially all about foreseeable harm. This includes factors like risk – volatility and tracking error – asset allocation, concentration risks, research list compliance, and asset checks such as high risk, rare holdings, and equity liquidity. Being alerted early to outliers against these tests enables rapid action.

The ex-post indicators, meanwhile, look at portfolio outcomes. Typically, one-year and three-year absolute and relative performance are checked, with options to calculate ex-post risk and tracking error. The idea is to reveal patterns in outlier performance and trends, and monitor deterioration and rectification. In addition to performance, yield can, where appropriate, be monitored against target.

3. Measure and record the test results so that deviation can be assessed and to inform actions for improvement.
All tests are run nightly, and the user has access to the results on their dashboard daily, giving calls to action. Results for every portfolio for each test are stored weekly providing trend reporting and historic checks at portfolio and enterprise levels.

The result is visibility and the ability to target significant, aged, and consistent issues because investment managers can see where issues lie, and how to assess and correct them.

4. Employ a consistent methodology for root cause analysis.
The first checks for root cause analysis, when the portfolio outcome is not in line with expectations, would be the current monitor tests’ statuses. After that, the past year’s history of test status and the known exceptions on the portfolio would be looked at. Lastly, a check of its performance against its peers for the same risk and objective for the same team and across the firm.

Together these provide a consistent framework for initial review.

5. Manage exceptions
Within every book of business, there are exceptions. Managing them at a granular level with standard reasons and free text justifications to make up structured data that can be analysed, makes sure that exceptions do not become the rule. This provides evidence of a review of issues with the portfolio and the actions agreed.

6. Routine reporting to review outcomes and manage areas of concern.
Reports can be run at any time giving flexibility, but routine reporting provides month-on-month and one- or two-year trend analysis. Used in this way and in conjunction with the number of days out analysis on failed tests, clear pictures of systematic issues can be identified and addressed.

7. Report on the outcome and check satisfaction.
Having captured the client’s requirements and setting their expectations at the start of the process, the annual review report plays back progress to the client and provides a checkpoint. Just as the investment proposal can be run at the desktop in seconds at any time, so can the annual review.

In the report, the current portfolio is compared to the assigned model and a series of checks is provided to the client:

  • Performance against the expected range as set in the client mandate and investment proposal
  • Asset allocation vs assigned model
  • Monitor test status checks and known exception text where applied
  • Trend reports on key monitor tests
  • Manager comments on key sections

By following these seven steps the investment manager gains much better insight into the client’s needs and objectives and can measure against those parameters at any time.

Ongoing testing of the client portfolio against mandate, model and investment policy with leading indications also alerts to foreseeable harm that can be mitigated or documented.

In addition, enterprise helicopter views to identify systematic issues within the firm and aid their resolution, plus an annual client checkpoint that looks at performance against an expected range of returns, can be successfully carried out to show a positive outcome.

If you would like to discuss any of the points raised here, please contact us at or see more information on our solution here.

Hawksmoor Investment Management signs up for BITA Risk enhanced portfolio monitoring

Hawksmoor Investment Management, has signed up for BITA Risk’s enhanced portfolio monitoring solution
Hawksmoor Logo

London, 5th June 2023 – BITA Risk, part of corfinancial, announces that specialist investment and fund management business, Hawksmoor Investment Management, has signed up for BITA Risk’s enhanced portfolio monitoring solution – BITA Wealth.

BITA Wealth delivers the analysis, data and management intelligence required to help towards delivering the requirements of the FCA’s newly introduced Consumer Duty, spotting foreseeable harm exceptions, accelerating their remediation and providing robust governance arrangements that provide and evidence good customer outcomes.

Hawksmoor’s CEO, Sarah Soar, commented: “We selected BITA Wealth after an extensive RFP process due to its reputation in delivering consistent client outcomes. The platform gives us enterprise oversight and control – enabling us to efficiently manage the risks of portfolio drift. The software will further empower our advisors with intuitive, relevant portfolio analytics that facilitate freedom within an established investment framework. In a nutshell, BITA Wealth will help us scale and manage our business as we continue with our acquisition strategy and bring other investment management firms into the Hawksmoor stable.”

“Our software will help ensure a consistent approach to oversight across Hawksmoor’s diverse range of investment managers. BITA Wealth will also support the implementation of Hawksmoor’s overarching investment strategy and further solidify their excellent risk management processes,” commented Daryl Roxburgh, President and Global Head, BITA Risk. “Underpinned by full exception management and approval processes, we help firms grow through demonstrable risk management, improved client retention, better M&A impact analysis, and protection against reputational risks.”

Hawksmoor Investment Management is a highly acquisitive wealth management firm, specialising in providing high quality discretionary management services for private clients including trusts, pension schemes and charities.

Consumer Duty – are you ready?

Consumer Duty - are you ready?

By Daryl Roxburgh, President and Global Head, BITA Risk® part of the corfinancial® Group

Wealth Management

Consumer Duty is imminent! But what are the practical implications of this legislation?  What needs consideration and how ready are you? 

The basic thrust of Consumer Duty is around best practices.

It is seen as a key facet of the FCA’s three-year strategy to drive good outcomes for consumers. A key part of that is that firms must be able to evidence compliance and in doing so collectively set a standard for the industry as a whole.

Firms need to:

  • Act in good faith towards retail customers
  • Avoid causing foreseeable harm to retail customers
  • Enable and support retail customers to pursue their financial objective(s)
  • Make sure they can deliver good outcomes overall business activities.

Consumer Duty will join up areas that currently are siloed and/ or have low visibility. In doing so the investment process from assessment of objectives through to investment performance will become more transparent and thus firms will have the ability to measure how they are doing when it comes to outcomes at each stage of the process.

Firms have a duty of care towards clients. To achieve this, they will need to assess how they will relate to customers not just through the products that are sold, but how they came to that point and decided what was and was not suitable. The onus is now on providers to tell their customers when they have something better or more suitable in their portfolio – and invite them to make the switch if they choose to do so.

They should also be able to pinpoint how and when they flagged the possibility of something going wrong, what they did about it and when.

This all forces best practice and is the core of Consumer Duty; positioning the right products and services to the right people at the right time and cost to achieve better outcomes across their financial lifecycle.

To do this leveraging data and insight will become more important than ever. At each stage of the process there should be a check of the outcome – not just investment ones – and data available to enable root cause analyses of issues. And, if a firm cannot evidence that it evaluated the customer’s needs from a whole-of-life and holistic viewpoint then they fail in its duty. The means to aggregate the customer’s financial position, and automate the analysis for both the consumer and the provider is a must, so as to provide the data-driven insights that can underpin individual, personalised propositions, as well as evidence that those insights were provided and that the portfolio was properly monitored to avoid foreseeable harm and provide a positive outcome.

Without these data analytics capabilities meeting Consumer Duty requirements will be nigh on impossible. More than that, being compliant with Consumer Duty also represents an opportunity for growth via open-finance, data-driven and customer-centric business models that will position firms well to capture a greater share of wallet, provide operational efficiencies and position them well for profitability.

But have you readied your data collection and analytics capabilities? What do you need to do? Are you ready?

We will shortly be publishing our view of Consumer Duty – Seven Steps for Successful Outcomes.

If you would like to discuss any of the points raised here, please contact us at or see more information on our solution here.

Portfolio risks and suitability – the intelligent anticipation of the unexpected

Meerkat watching

Daryl Roxburgh, President and Global Head of BITA Risk® part of the corfinancial® Group

Wealth Management

In a discussion last week with a CIO, he said, “investors may be disappointed in returns – due to the market – but they do not want to be surprised”. This prompted us to write about how to avoid surprises, or “the intelligent anticipation of the unexpected”. 

Identifying, understanding and mitigating portfolio risks will help remove surprises and lead to more consistent portfolio performance. This does not have to mean 100% rebalancing to a strict model, something that is not always appropriate or possible in HNW and UHNW client portfolios. More than with the right oversight and insight, managers can have freedom within a framework to deliver good suitable outcomes to their clients.

Automating the analysis of portfolios and assets to identify those that fall outside client mandate or investment policy does six things:

  1. Focus attention where needed
  2. Prioritises action by criticality
  3. Identifies patterns or systematic behaviour
  4. Enables known issues to be validated with the client and removed from the exceptions list
  5. Reduces data prep time by 80%, effort that can be better focussed on actions
  6. Puts the tool on the IM desk, making it part of daily portfolio management

Checking beyond basic front office system drift and client restrictions, we would suggest considering eleven different groups of monitor tests, to find the proverbial needle in the haystack before it becomes a risk:

  • Portfolio market risks
  • Concentration risks
  • Bond metrics
  • Performance deviation
  • Goal achievement deviation
  • ESG and ER and preferences and restrictions
  • Asset allocation
  • Asset class characteristics
  • Research and non-research list assets positions
  • Asset attribute flags e.g., risk, liquidity, rare, restricted
  • Admin flags e.g., review due, dummy identifiers

The appropriate and relevant tests will depend on the firm’s investment proposition and business model. Often, different business units served by the same installation will only have a few tests in common.

You might know that 80% of your portfolios have a minimum of 80% invested in assets on the research list, but how concentrated is the money not invested in the research list?  Are there significant positions either at the firm or branch level that are not researched, and are these a risk?

Do certain teams or branches have systematic outlier characteristics? Do certain managers have a very high proportion of portfolios with a CGT exception?

Monitoring these daily not only gives the IM the heads up that they need to check something when it occurs but also provides a trend report through time on the resolution of issues, so continual analysis helps stay on top.

Just as important is a structured process of recording accepted and known exceptions. These not only need internal checks but should also be validated with the client on a periodic basis, closing the loop.

The result of the use of this data, analysis, and process can be expected to be:

  • Better delivery to client expectations and suitability of outcome
  • Reduction in unexpected risks
  • Improved consistency of outcome
  • Demonstrable automated risk management process to attract clients, advisers and IMs
  • Better understanding of the relationship between risks and return in the business.

The frequent comment about Consumer Duty is that much of it is just good business practice. The management information listed above can evidence good outcomes and that the processes are in place to ensure they are being beneficial to the client and firm alike.

If you would like to discuss any of the points raised here, please contact us at or see more information on our solution here.