When done well, the CIP works with other frameworks to enhance adviser productivity, improve client outcomes and simplify ongoing reviews and communications.

So let’s dive in! Here’s our guide to what a CIP is, how it’s influenced by other frameworks, and what to include to get it right. Need expert pointers? Give us a shout any time for support with your CIP, PROD and other aspects of proposition.

What is a CIP? 

A centralised investment proposition – or CIP – is a structured framework for delivering consistent, compliant and cost-effective investment solutions to your clients. 

Typically, it will outline the firm’s process for assessing client needs, selecting suitable investment strategies, and ongoing monitoring.  

Standardising investment decisions this way helps advisers reduce risk, improve efficiency and ensure that clients receive a repeatable and evidence-based service.  

Having a CIP in place also supports regulatory compliance, and demonstrates transparency, governance and a clear rationale for recommendations – ultimately enhancing client trust. 

With a structured ‘way of doing things’ in place, advisers can focus on financial planning and client relationships, confidence that investment discipline is taken care of. 

In short: the CIP is a standardised framework advisers use to deliver consistent, compliant investment solutions.  

What does CIP have to do with PROD? 

Firms producing their CIP should base it on their PROD assessment of their current client bank and the client target market going forward.  

So as a quick refresher, Product Intervention and Product Governance – or PROD – is the FCA regulation ensuring financial advisers recommend products designed for and suitable to their target clients.  

 PROD requires firms to define target markets, understand product features and risks, and match them to client needs. By embedding PROD, firms demonstrate compliance, reduce the risk of mis-selling and improve client outcomes. 

In short: A firm’s PROD ensures products are matched to the right client markets.  

How do CIP and PROD work together? 

It’s important that CIP and PROD work together. Here’s why:  

When products are matched to the right client markets, and a framework outlines investment solutions, advisers are giving the right advice to the right people, and can evidence it. 

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What else influences a CIP? 

A firm’s CIP must be supported by platforms and products specified within.  

There’s often a chicken-and-egg scenario making outlining the CIP a tough job: some investment strategies aren’t available on the first choice of platform; one or the other has to be reconsidered to find a good compromise. 

Our expert team at Verve tends to lean on prioritising the investment strategy suitability first and foremost – because this will be more visible and impactful for clients - with the compromise placed on the platform features. 

What does a good CIP include? 

A ‘good’ centralised investment proposition covers whatever your clients need. It doesn’t need to cover every possible eventuality, but about 75% of average client needs is a good level.  

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When outlining a CIP for a client, our experts include: 

• Referred products and investment strategy panels linked to client need. 
  

• Research to back up choices, highlight key points where suitability is addressed. Instead of doing it per client, your research goals are based on the objectives of a wider client bank rather than on an individual basis. Research can sit on file to provide rationale for the document distributed to staff and clients. 
  

• Consideration of investment philosophy preference – Active, Passive, ESG, ethical etc (or any combination of). There’s no right or wrong answer, but if you have firm opinions and beliefs around cost and process, then these should be detailed with reasons.  
   
  Here’s an example: “We as a firm prefer passive because this affords lower costs to clients.”  
  Another: “We prefer active management for more proactive oversight in the markets for reduced volatility as we have a bank of retired.”  
  Or finally: “We prefer to centralise our ESG strategies as we tend to deal with a younger client bank who frequently express a preference for sustainable investing.” 
  

• Consideration should be given in turn to provider investment processes and risk management procedures (rebalancing frequency, asset allocation source and methodology, tactical bounds, strategic positioning etc). 
  

• Range – Funds and portfolios typically feature either 5, 7 or 10 strategies with some mapping to risk profilers more readily than others. Some funds and portfolios may be built specifically to map to certain profilers.  

Look out for my upcoming post offering research direction on investment structure. Or, if you have questions around building a CIP, get in touch with me and I’ll be happy to answer them.   

What’s the importance of getting a CIP right? 

Let’s be clear: there is no regulatory requirement to have a CIP but it is highly recommended. 

A CIP offers consistency, efficiency and suitability – and makes it much easier to articulate your proposition for consumer duty requirements. 

CIPs are all about showing your working, especially as there is no absolute “right” answer to a lot of clients’ needs.  

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The FCA is interested in how the client came to be invested in a specific strategy, which a good PROD, product due diligence and CIP will readily convey. 

Our stance at Verve is that a CIP should be a useful reference guide that is commonly used within the firm, and makes the lives of advisers, paraplanners, admins and any outsourced assistance as easy as possible, rather than sat hidden away in a deep nest of files only to be brought out when the FCA call for an information request.  

Think about cars: they all get people and their stuff from point A to point B. That’s it at a high level. But some drivers want reliability; others luxury. Some want an automatic; others a manual gearbox. The car they end up with will reflect that. 

Bringing it back to CIP, does this mean you have to have a solution ready-made for every single eventuality? No.  

But you must be confident in what you are recommending. If you are passionate about passive investing, active investing, hybrid solutions, ESG or ethical, then be prepared to convey that to your clients!  

Our experts at Verve are seasoned experts in helping advice firms create their business DNA – the combination of PROD, PDD, CIP and CRP, that is.  

If you’re looking for help getting your firm foundations in place, we’re happy to help – book a chat or drop us a line today to get started.  

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