Value for Money (VfM) framework and assessment

Although Value for Money assessments have been used by the fund industry for a little while now, their requirement from an MPS and advised model perspective is relatively recent.

The model portfolio manager should now have a VfM policy in place, which outlines the methodology by which it will measure Value for Money on an ongoing basis – in our view, the policy should be the first ‘ask’ to be made by advisers.

The MPS VfM assessments that follow are likely to involve a pre-set scorecard methodology. This will account for obvious deliverables such as performance and cost but will also include an assessment of the wider benefits that clients receive (for example, informative communications, reporting or perhaps returns forecasts or risk-based data which can assist in planning outcomes or understanding risk).

In simple terms, advisers should ask to see the VfM framework that the investments or MPS provider has in place, as well as its actual assessment against these considerations, on an ongoing basis. Higher quality investment providers will update their VfM statements on at least an annual basis.

Read our full CIP checklist