DFM Financial Strength Assessment Reports

Companies Covered

These Financial Strength Assessment Reports cover selected companies operating in the DFM Rating Sector.

Purpose of Reports

In the UK, financial advisers are required to consider the financial strength of organisations with whom they deal. Others also need information on which to assess DFMs' operations.

AKG DFM Financial Strength Reports are designed to meet the information needs of advisers. The reports seek to cover the primary Discretionary Fund Managers operating in the UK intermediary market.

Assessment Reports Format & Coverage

AKG’s focus and approach has remained consistent over the years since it commenced assessment and rating support for the market. However, coverage, format and presentation has rightly evolved over this period, in line with the needs and expectations of assessment and rating users in the market. And AKG considers further changes on a continual basis.

In 2017 AKG made specific, significant format improvements to the Financial Strength assessment reports for the benefit of users. The reports being a primary mechanism for the distribution and explanation of the AKG assessments and ratings.

In summary these improvements:

• Take account of new statutory reporting information from insurance companies, under Solvency II, where appropriate

• Align report sections to better reflect the most important aspects considered in assessment and rating; including a specific background section in the full participatory report for ‘Parental & Group’ context and then drilling down on distinct, ‘strategic’, ‘operational’ and ‘financial’ areas at the entity level, at which ratings continue to be given.

• Give greater prominence to key assessment comments, improving ‘at a glance’ readability and better communicating reasons for specific ratings

• Update the supporting ratings (the non-financial strength ratings) to specifically indicate assessment for ‘Business Performance’

• Enhance identification of the reports with the sectors covered (including with the use of specific colours), for further clarity and to emphasise AKG’s comparative sector approach.

Styles of Report Published

Two different styles of report are published:

  1. Participatory Reports - For each of the DFM companies in the market which participate in the production of the reports, a participatory report is issued, containing detailed analysis of all relevant aspects of its long-term business operations, together with a comprehensive set of AKG ratings - Financial Strength Ratings at the level of the relevant investment management company; together with Supporting Ratings for the key areas of Image and Strategy, Service and Business Performance.
  2. Non-Participatory Reports- For remaining DFM companies where there is sufficient intermediary market demand, a non-participatory report is issued, containing an abbreviated analysis of the major aspects of its long-term business operations, together with a DFM Financial Strength Rating.

Each report collates relevant information from a range of sources such as a company’s regulatory returns, its report & accounts and material provided by the companies themselves, and incorporates expert independent assessment. For participatory report companies, the process is augmented by regular meetings and communications with AKG.

Rating Only Approach

For some DFM companies which are assessed and rated by AKG no report is produced. This is due to a low level of market demand for the additional supporting details delivered by means of a report. However, the same methodology is used in the production of ratings for such companies as is used for those assessed on a public information basis and which have a non-participatory report issued.

Rating Portal

Ratings for DFM companies are contained in the AKG Rating Portal together with some background supporting information and these ratings form part of the wider rating population delivered through leading third party selection systems.

To Purchase Reports

AKG DFM Financial Strength Assessment Reports can be purchased online for immediate PDF delivery at £23.50+VAT for each report.

Alternatively, you can contact AKG.

Definition of DFM Provider

Discretionary fund or investment management (most commonly abbreviated to DFM, but also DIM) is an investment service by which a designated professional third party manager is granted discretionary powers for investment decisions on a client portfolio.

Different types of portfolio service sit within this, such as the more bespoke traditional Discretionary Portfolio Service (DPS) and Managed Portfolio Services (MPS) which comprise a number of ‘standard’ collective model portfolios.

Some DFMs also offer Multi Asset funds.

In the case of any of these services, a financial adviser, who recommends such investment services to their client, maintains responsibility for that client and must ensure that the DFM is suitable, secure and sustainable.

Review Process and Report Issue

Each report is updated at least once a year, following extensive assessment of the latest statutory financial data, together with other financial and supporting information and, in the case of participatory report assessments, further interrogative elements.

However, the underlying AKG assessment process undertakes ongoing monitoring and review of assessments and ratings throughout the year. This means that whilst always taking a ‘long term view’ of financial strength and adding depth and richness of data through the annual revision process, the assessments, ratings and their reports are part of a constant, dynamic process and can be reissued if required at any time.

Availability of Information

AKG has attempted to obtain as much detailed information (particularly of a financial nature) as possible about each of the companies profiled in this series of reports. However, the depth of information available to AKG varies from one company to another, for the following reasons:

AKG's aim is to publish comparable information, presented in a consistent manner, for each company. Where this has not been possible, due to the information not being forthcoming from the company concerned, blank tables are shown. AKG's approach to rating companies which do not supply relevant information is naturally much more cautious than for those that do.

Format of Reports

Brief details of the information currently published for each type of report can be found here for Participatory Reports and here for Non-Participatory Reports.

N.B. Reports issued prior to 1 September 2017 for this sector were called DFM Profile and Financial Strength Reports - brief details of the information published for each type of report can be found here for Participatory Reports and here for Non-Participatory Reports.

Guide to AKG Ratings

A detailed explanation of AKG's methodology underlying the determination of the ratings published in its series of DFM Profile & Financial Strength Reports can be found here.

Related Links

Contacting AKG

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