AJ Bell moves its managed portfolio service to ‘reliance on others’ basis

Kevin Doran
6 August 2021

AJ Bell today announces it has updated its managed portfolio service (MPS) to operate on a ‘reliance on others’ (ROO) basis. The change reduces risk and cost for advisers, as they will not be responsible or liable for the investment decisions made in the underlying portfolios.  

The changes apply to the entire AJ Bell MPS range, which encompasses active, passive, ‘pactive’ and responsible MPS options, as well as its Retirement Portfolio Service, a centralised retirement proposition for clients in drawdown.

Previously AJ Bell’s MPS operated on an ‘agent as client’ (AAC) basis.

The difference between AAC and ROO explained

Under AAC, the adviser – not their client – is treated as the client of the MPS manager. This means the adviser could be liable for customer complaints with respect to the underlying investments – tying up their time, compliance resources and potentially impacting on their PI cover.  

Under ROO, the client is treated as the investor, so there’s a direct relationship between all three parties: the adviser, their client and the MPS manager. Responsibility for managing the portfolios rests solely with the MPS manager, leaving the adviser to assess only the initial and ongoing suitability of the MPS solution itself – the same as if choosing a multi-asset fund.

The practical implications of this change 

AJ Bell has updated its terms and conditions for its MPS, but no action is required from advisers.  They, nor their clients, will see any difference in the way the MPS operates.

There will be no additional costs, no extra contact with clients by AJ Bell, and no additional client information required by AJ Bell on an ongoing basis.

Advisers will simply benefit from the potential time savings and reduction in risk that comes from not being accountable for monitoring the investment decisions made in the underlying portfolios.

Kevin Doran, MD of AJ Bell Investments, comments:

“This is a change driven by advisers. Our MPS is growing in popularity as advisers appreciate the combination of choice, cost and communication we have committed to offering the market.  Having operated our partnership portfolios on a Reliance on Others basis for a number of years, many advisers have told us that they’d prefer the MPS to operate on the same basis.  Advisers will understand the importance of that to their business, both in terms of the reduction in risk it delivers and the substantial time savings it will generate.”

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