HB Today – Stewart Financial Group is the first Hawkes Bay financial advisory business to be awarded a DIMS licence, meaning independent Trustees can have a high level of confidence in their services.
Stewart Group (SG) officially received its DIMS licence on October 31 this year.
This licence, coupled with their recent Centre for Fiduciary Excellence (CEFEX) accreditation, gives clients assurance they are dealing with a firm of the highest integrity.
DIMS stands for Discretionary Investment Management Services. It is part of government regulation that came into force on June 1 this year under the Financial Markets Conduct Act, aimed at protecting investors who have given investment decision-making discretion to a provider.
Authorised Financial Adviser Glen Trillo leads SG’s wealth management team and says the DIMS licence builds on the fiduciary excellence SG strives to provide.
In a nutshell, a DIMS licence allows advisers from that entity to trade on behalf of their clients, without getting sign off from the client for every trade.
For those with Trusts, it means Trustees won’t be required to sign off on trades and, therefore, are not seen in the eyes of the law to be making investment decisions but rather outsourcing that function to an expert.
This is particularly important in a region like Hawke’s Bay, which has one of the largest number of Trusts per capita of any region.
Trillo says the process of applying for a DIMS licence was exhaustive and covered everything from SG’s custodial arrangements to the composition of its investment committee.
SG achieved CEFEX accreditation on July 9 after voluntarily subjecting the firm to the international accreditation process, joining an exclusive group of only eight firms to achieve a stand-alone CEFEX accreditation in New Zealand.
CEFEX is an independent global assessment and certification organisation. CEFEX certification helps determine the trustworthiness of investment fiduciaries and is regarded as a global standard of excellence.
A fiduciary is a person who holds a legal or ethical relationship of trust with one or more parties – basically, it is someone who prudently takes care of money for another person.
SG Director, Nick Stewart, says Trustees are regarded, in the eyes of the law, as fiduciaries.
“If Trustees are dealing with us, as a fiduciary, they know they have given responsibility to a fully accredited person who is acting in the best interests of the Trust.”
Using a CEFEX accredited firm means people can be confident that firm has been evaluated, and will continue to be evaluated by, an independent body with the best global oversight and best practice.
The DIMS license also requires ongoing assessment, with a yearly audit from government regulator, the Financial Markets Authority.
“Trustees can give a big tick on the research and governance that a Trustee, as a fiduciary, is supposed to do. We are helping Trustees to fulfil their obligations,” Stewart says.
“A lot of people don’t know their obligations and think it won’t happen to them. But if something does happen, and a Trustee is found wanting, they will be judged against what a prudent professional would have been – and that is a high bar.”
Dealing with a non-DIMS provider exposes independent Trustees to a higher level of risk, as they are required to personally sign off on investment decisions – something they may not have the expertise to do.
Using a non-DIMS provider means there is less recourse available to you, should the investment under-perform.
Trillo explains that with Trust law reform underway, dealing with a DIMS and CEFEX accredited provider helps to ensure Trustees fulfil that due diligence obligation. “The onus is on the Trustee to do due diligence on who they engage. You can have a high level of confidence and assurance you are dealing with an investor who can make decisions for you, and has been audited and fully accredited.”
Choosing to undertake the CEFEX accreditation process and to apply for a DIMS license is in keeping with SG’s mantra of bringing the best global practice to their clients and to Hawke’s Bay, Stewart says.
“We are purely focused on Hawke’s Bay and are committed to helping the investors of this region…We want to improve the investor experience and outcomes for our investors and their trustees.”
There are currently 41 DIMS-approved advisory firms nationwide. (35 when combining associated entities) A full list can be found here.
For more information please email Glen Trillo.