Central Investment Proposition Guide

We support financial advisers with the design, development and ongoing review of Central Investment Propositions, often referred to as CIPs.

A Central Investment Proposition is a structured, evidence-based investment framework that helps advice firms deliver consistent recommendations across their client bank. When designed well, it can support better governance, clearer due diligence, stronger documentation and more consistent client outcomes.

For many firms, the challenge is not simply having a CIP in place.

It is making sure it is properly reviewed, clearly documented, aligned to the advice process and able to stand up to Consumer Duty expectations.

If you are reviewing your CIP, building one from scratch or looking to strengthen your investment proposition, our outsourced paraplanning services can support everything from research and due diligence through to documentation, governance and ongoing review.

What is a Central Investment Proposition?

A Central Investment Proposition is a standardised investment approach that allows financial advisers to offer a consistent and well-researched investment solution to clients.

Rather than starting every recommendation from scratch, advisers can work within a defined investment framework that has already been researched, reviewed and agreed by the firm.

A good CIP will usually set out:

• the investment solutions the firm uses
• the types of clients those solutions are suitable for
• the research and due diligence behind the selections
• the governance process for reviewing the proposition
• the circumstances where it may be appropriate to go outside the CIP
• how the firm evidences value, suitability and client outcomes

That does not mean every client receives the same recommendation.

It means there is a clear framework behind the advice, with enough flexibility to reflect the client’s objectives, attitude to risk, capacity for loss, tax position, time horizon and wider circumstances.

Why financial advisers are reviewing their CIP

Many financial advice firms already have a Central Investment Proposition of some kind.

However, Consumer Duty has made the quality of that proposition, and the evidence behind it, even more important.

Firms are reviewing their CIP for several reasons, including:

• increased regulatory scrutiny under Consumer Duty
• the need for stronger evidence and documentation
• the need to show how investment solutions support client outcomes
• improving consistency across advice recommendations
• reviewing value for money
• making sure the proposition still reflects the firm’s client segments
• checking that governance and review processes are properly recorded

For some firms, the CIP itself may still be suitable.

The bigger issue may be whether the rationale, governance and due diligence are clearly evidenced.

That distinction matters.

It is one thing to have an investment framework. It is another to show why it remains appropriate for the clients it is designed to support.

Who benefits from a Central Investment Proposition?

A good CIP should benefit both the advisory firm and its clients.

For firms, it can support consistency, efficiency and better governance.

For clients, it should help ensure investment recommendations are researched, reviewed and aligned with their needs.

The key point is that a CIP should not be built around business efficiency alone.

It should reflect the firm’s client bank.

That includes client segmentation, different attitudes to risk, different investment timeframes, different tax positions and different preferences, such as active, passive or ethical investment approaches.

Flexibility is also important.

Client circumstances change. A client may retire, inherit money, suffer a change in health, lose a spouse, sell a business or start drawing income from their portfolio.

A robust Central Investment Proposition should be structured enough to provide consistency, but flexible enough to adapt when a client’s needs change.

Any costs should also be clear, transparent and capable of being explained.

How does a CIP work for an advice firm?

Some firms manage their Central Investment Proposition through an investment committee.

That committee may be responsible for reviewing investment selections, monitoring performance, assessing value for money, challenging existing solutions and deciding when changes are needed.

The committee may also set the parameters for when advisers can go outside the CIP.

That point is important.

A Central Investment Proposition should not become a rigid process that overrides client circumstances. There should be a clear route for exceptions where the standard framework does not fit the client’s needs.

An experienced paraplanner, suitability specialist or outsourced paraplanning partner can add real value to this process, particularly where the firm needs support with research, due diligence, documentation and governance.

For smaller and medium-sized advice firms, establishing and running a CIP can be time-consuming.

In-house research takes time. Investment committee meetings need structure. Decisions need to be recorded. Due diligence needs to be kept up to date. Changes need to be explained clearly.

Consumer Duty has added another layer of accountability.

There should be no blurring of lines between what is efficient for the business and what is right for the client.

Using third-party investment solutions

Some advice firms choose to outsource investment selection to a third party.

This might include Managed Portfolio Service providers, Discretionary Fund Managers, platform-based model portfolios or other outsourced investment solutions.

This can work well, but advisers still need to understand their responsibilities to both the third-party provider and their own clients.

Outsourcing investment management does not remove the need for due diligence.

Firms still need to understand:

• why the provider has been selected
• which clients the solution is suitable for
• how the solution fits the firm’s advice process
• how performance, risk and value will be reviewed
• what governance is in place
• what happens if the provider changes approach
• how the client journey is affected
• how any migration from one solution to another will be handled

Moving from one third-party provider to another should also be treated carefully.

There is a real challenge for advisers in explaining why a firm is moving from one provider to another, particularly if the change happens within a short period of time.

The rationale needs to be clear.

The due diligence needs to be comprehensive.

And the client impact needs to be considered.

CIP governance and Consumer Duty

Governance is one of the most important parts of a Central Investment Proposition.

It is not enough to choose a range of providers or funds and leave the proposition untouched.

Firms should be able to show how the CIP is reviewed, how often it is reviewed, who is responsible for reviewing it and what evidence supports the decisions being made.

That includes looking at value for money, client outcomes, performance, risk, charges, suitability and whether the proposition still reflects the firm’s client segments.

Under Consumer Duty, firms need to be able to evidence how their products, services and processes support good outcomes for clients.

For a CIP, that means asking questions such as:

• Is this proposition still suitable for the clients it is designed for?
• Are the charges clear and justifiable?
• Are clients receiving fair value?
• Does the proposition still align with the firm’s target client segments?
• Are there clear rules for when advisers should go outside the CIP?
• Are reviews properly documented?
• Is the firm relying too heavily on a provider without enough challenge?
• Can advisers explain the rationale clearly in suitability reports?

The answers to those questions do not need to be complicated.

But they do need to be evidenced.

Back-office systems and risk profiling

Another important consideration is how the Central Investment Proposition works alongside the firm’s back-office systems, risk profiling tools and advice process.

The chosen risk profiling tool should work in conjunction with the CIP.

There should be a clear link between the client’s attitude to risk, capacity for loss, investment objectives and the recommended solution.

If the firm uses model portfolios, platforms or third-party providers, advisers and paraplanners need to understand how those options map across to the risk profiles being used.

This is where good process matters.

A CIP should make advice clearer, not harder to explain.

If the system, risk tool, investment proposition and suitability report wording do not line up, the advice file can become harder to evidence.

Avoiding complacency

One of the risks with any Central Investment Proposition is complacency.

Once a firm has a CIP in place, it can be tempting to assume the hard work has been done.

But a CIP should not be static.

Markets change. Provider propositions change. Costs change. Client needs change. Regulation changes. The firm’s advice process may also change over time.

That means the proposition should be reviewed regularly, with good record keeping around the discussions, decisions and rationale.

The question is not only:

“Do we have a CIP?”

It is also:

“Can we evidence why this CIP remains appropriate?”

That is the part many firms need to focus on.

What should a Central Investment Proposition include?

A well-documented Central Investment Proposition should usually include:

• a clear explanation of the investment approach
• client segmentation
• the recommended investment solutions
• research and due diligence
• risk mapping
• cost and value assessment
• governance and review process
• rules for exceptions
• provider due diligence
• documentation of investment committee decisions
• suitability report wording guidance
• review dates and responsibilities

The exact structure will vary from firm to firm.

But the aim should be the same: to create a clear, consistent and evidence-based framework that supports suitable recommendations and good client outcomes.

Need support with your Central Investment Proposition?

If you are reviewing or building your Central Investment Proposition and need structured, practical support, We Complement can help.

Our team supports financial advisers with research, due diligence, documentation and governance through our outsourced paraplanning services.

We can help you strengthen the evidence behind your CIP, review how it fits into your advice process and make sure the rationale behind recommendations is clear, consistent and properly documented.

For firms that want wider support, our suitability consulting and paraplanning services can also help connect the CIP with suitability reports, advice file quality and ongoing review processes.