A new potential revenue stream for independent financial advisers (IFAs) has been created with the availability of a Discretionary Portfolio Service (DPS) accredited by Islamic Bank of Britain (IBB) as Sharia compliant. The DPS is a service that provides a range of investment portfolios comprising Sharia compliant assets. The DPS allows IFAs to tap into a large pool of customers looking to maximise their wealth with Sharia compliant and ethical returns. (full story)
The service is provided by Praemium, the portfolio administration specialists. IFAs can offer this service to their clients by registering on the Praemium platform. Encouraged by the market potential the DPS offers, leading city IFA firm Radcliffe & Newlands is already offering its clients the service. The firm believes the service will allow it to realise potential revenues that are available from both new and existing clients.
Ibrahim Thompson, independent financial adviser at Radcliffe & Newlands, explains, "Until now, we could only offer a limited, ad hoc range of Sharia compliant products. We therefore had to work harder to find the right solution for the client and then manage it on a manual basis thereafter. The DPS has made life simpler with a ready-made solution offering a range of portfolios, all with returns guaranteed to be Sharia compliant and ethical. Now we can offer a comprehensive investment service that is automatically rebalanced and managed on a discretionary basis."
He continued, "The DPS has given us a reason to reach out to client and prospects with something new, innovative and in-demand."
IBB is running a series of seminars across the UK for IFAs wishing to learn more about the service. The seminars will be held in London, Manchester and Birmingham. They will explain how the service works and the products and portfolios that will be available. The seminars will also help IFAs understand how to register through Praemium, and how this will help generate more business. Further details can be obtained by contacting IBB on 0845 60 60 703.
With the DPS, advisers can access a range of portfolios on behalf of their clients. Depending upon the needs and risk profile of the client, these could include cash, Sukuk (Islamic bonds), commercial properties and equities. These portfolios can be included in ISAs or SIPPs.
The DPS will appeal to a range of professional advisers, including:
- IFAs targeting retail investors who require a diversified range of Sharia compliant assets
- Investment advisers to High Net Worth clientele who would typically use a discretionary asset manager or investment adviser to manage their portfolio
- Solicitors providing advice on estate planning
- Accountants providing advice on tax efficient strategies
Commenting on the launch, Sultan Choudhury, Commercial Director, IBB, said, "The feedback from the IFA community on the DPS accredited by IBB has been overwhelmingly positive. This service will fill a gap for UK Muslims who to date have had limited investment choice particularly for inclusion in their pensions."
Montague Capital, the investment management company, has been selected to design and manage the portfolios available on the DPS. All portfolios must meet with the approval of the stringent conditions set by IBB's Sharia Supervisory Committee, which consists of leading Sharia scholars.
Anthony Corbett, Investment Manager at Montague Capital added, "The DPS accredited by IBB is a unique service for the UK market. For the first time IFAs can offer their clients access to portfolios comprising Sharia compliant assets. These include equities, Exchange Traded Funds (ETFs), real estate funds and Sukuks (Islamic bonds). The Islamic finance investment industry is currently on track for growth in 2011. This makes it a good time for IFAs to sign up to the service and develop their Islamic finance and ethical offering."
IFAs developing their Islamic finance offering through the DPS will be tapping into a thriving global Islamic finance industry. The 2010 Ernst & Young Islamic Funds & Investment report found that globally there are almost 700 Islamic Finance funds and $52bn assets under management
IFAs who wish to register for the DPS accredited by IBB may do so by contacting Praemium on 0207 562 2450.
IBB provides the largest range of Sharia compliant retail financial products in the UK and is working with experienced partners to expand the way in which consumers can manage their finances.
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