Financial Markets Atlas: Wealth Management (UK)

A Retail Equity Order Through the Platform

A client buys a stock either on the advisor’s recommendation in an advisory account (A) or on their own in a self-directed brokerage account (S). The order goes from the firm’s system to the custodian platform, which routes it to a systematic internalizer or an exchange, and the shares settle into the client’s account at the platform on T+2. The firm never touches the shares: it advises, enters, checks and reports.

• United Kingdom: a retail order in a UK share goes to the RSP network (the retail service providers quoting against the London Stock Exchange’s order book) or to the exchange and the MTFs under the firm’s best execution policy, with appropriateness checked for a complex product; payment for order flow is banned by the FCA’s inducement rules since 2012; the purchase carries stamp duty reserve tax of 0.5%, collected through CREST; the firm reports the transaction to the FCA through an ARM and settles at CREST on T+2, T+1 from October 2027.
• Account types and standards: an advisory account charges an asset-based fee and the firm owes the COBS suitability duty and the Consumer Duty; a brokerage account pays commissions and the investment firm owes COBS suitability on recommendations; a self-directed order carries neither, only the platform’s account controls; most wealth firms run both and the client often has both.
• Execution for retail: orders go to systematic internalizers (the RSP market makers and the SIs: Winterflood, Peel Hunt, Flow Traders) or exchanges through the platform’s smart order router; the market makers fill inside the spread through the RSP network; payment for order flow is banned by the FCA’s inducement rules; the FCA’s wholesale markets reforms removed the share trading obligation and the volume caps, and the bond consolidated tape is coming.
• Custody: the client’s shares are held in nominee name at the custodian’s investment firm (a CREST participant), protected by the CASS rules and the FSCS; an adviser firm uses a third-party custodian (Transact, Quilter, Aviva); a private bank or a large group uses its own custodian; either way the firm’s records are a copy of the custodian’s.
• What the firm keeps: the advice record (the recommendation, the rationale, the checks), the order record, the household data (allocation, drift, tax lots, cost basis for the annual tax statement through the custodian) and the performance report; the custodian keeps the account, the statement and the tax reporting.

An ETF Traded Across Model Accounts, Aggregation and Rotation

A model change becomes thousands of orders: the rebalancer generates a buy and a sell in every account that follows the model, the desk aggregates them into one block per custodian, the custodians work the blocks in the market, and the fills are allocated back to the accounts at each custodian’s average price under a rotation policy. The settlement is the custodians’ net at the CCP; the firm’s work is the generation, the allocation and the reconciliation.

• United Kingdom: the ETFs are UCITS ETFs, most of them Irish-domiciled, listed on the London Stock Exchange and held in CREST through depositary interests (CDIs) on Euroclear Bank’s international structure; no stamp duty on the Irish ETFs; the model trades are aggregated under the firm’s allocation policy and the FCA’s fairness rules, and the model portfolio services on the platforms run the same flow at scale.
• Model-based advice: most wealth firms run model portfolios (in-house, or from asset managers and strategists through model hubs) across their advisory accounts, with a rebalancer (Envestnet, Orion, Black Diamond, the custodian’s own, or Aladdin Wealth for the largest) that generates the trades; the advisor chooses the model and the exceptions; the desk trades them in aggregate.
• Trade rotation and allocation: trading the same change across many clients, several custodians and sometimes several platforms raises a fairness question the FCA examines; a rotation policy (randomized or alternating order) and a documented allocation method are the controls; the rotation log is part of the examination file.
• Taxes: taxable accounts get lot-level treatment (specific lot identification, loss harvesting with a replacement holding for 31 days, disposal and repurchase checks across the household’s accounts); retirement accounts trade without tax constraints; direct indexing extends the same mechanics to hundreds of single stocks per account.
• Multi-custodian operations: an adviser firm’s clients may sit at two or three custodians; the firm’s systems take position and transaction files from each every night, reconcile them to the rebalancer and the performance system, and handle each custodian’s trading, cashiering and document interfaces separately.

A Collar and a Covered Call Program on a Concentrated Position

A client who will not sell a large low-basis stock position hedges it with a collar and earns income on part of it with covered calls. The advisor recommends and documents, the platform routes the options orders to the exchanges and clears them at ICE Clear Europe against the shares in the account, and expiry month decides whether the client keeps the shares or is assigned. The tax and holding period effects are part of the advice.

• United Kingdom: equity options on UK names trade on ICE Futures Europe and clear at ICE Clear Europe; the client passes the appropriateness test for a complex product and the firm’s own options approval; most UK retail options business is in US options through a US broker, and the FCA’s leverage limits apply to the CFDs and spread bets that replace options for many retail clients.
• Options in wealth accounts: covered calls, protective puts and collars on concentrated positions, cash-secured puts, and income overlays are the common uses; the firm’s options approval levels, the client’s options agreement and the KID are prerequisites; the appropriateness rules for complex products governs the supervision of options accounts.
• Tax: a collar that removes substantially all risk can be a disposal for tax in most the UK; a qualified covered call keeps the shares’ long-term holding period only if the strike is not too deep in the money; premiums received are short-term gains at expiry or assignment; the advisor’s recommendation documents the analysis and often involves the client’s tax advisor.
• Alternatives for a concentrated position: a contribution of the shares to a holding company (where the national tax law defers the gain), a prepaid variable forward with a bank (see the sell-side page, Equities), a pre-arranged selling plan for insiders under UK MAR, a donation of the shares to a foundation and direct indexing with loss harvesting around the position; the collar is the reversible one.
• Operations: the platform marks open options daily, flags shares held against short calls, processes assignments from ICE Clear Europe as sales on T+2 and watches early exercise around ex-dividend dates; the advisor sees the same in the workstation and is responsible for the client conversation before expiry.

A Fund Purchase Through the Platform, in Nominee Name

The advisor recommends a fund and a share class, the platform sends the order to the fund platform before the fund’s cut-off, the transfer agent issues shares at that day’s NAV, and the cash settles through the fund platform or directly with the manager within the fund’s cycle. The fund either sees one omnibus account in the platform’s name (O) or a client-level account kept in sync by the transfer agent’s register (N). Distributions and any trailer fees flow back the same way.

• United Kingdom: fund orders go to the fund’s authorised corporate director or its transfer agent through the fund platforms’ messaging (Calastone, EMX) or directly; the platform or the firm holds the units in nominee name; the client pays the platform charge and the adviser charge and the fund pays no trail since the Retail Distribution Review (2013) and the platform rules (2014), so the clean share class is the norm; the KIID or the KID is delivered before the order, the dealing cut-off is in the prospectus (noon for most funds) and the price is forward.
• the fund platform and the transfer agent’s register: the fund platforms (Calastone, EMX) carry most of the cross-border fund orders in the UK; the fund platform transmits orders and settles the money, the transfer agent’s register keeps the investment firm’s and the transfer agent’s records aligned at the account level; omnibus accounts have replaced registered accounts at the large platforms, with the platform doing the sub-accounting and the fund paying for it.
• Share classes: clean classes with no trailer (the norm since the Retail Distribution Review of 2013 ended commission on advised sales and the platform rules of 2014 ended rebates, 2016 for legacy business), legacy bundled classes with a trailer the platforms have mostly converted, institutional classes with lower ongoing charges for large tickets, and the income and accumulation variants; choosing the class is a suitability and value question under the Consumer Duty, and the FCA’s reviews of legacy bundled classes and the platforms’ conversions are the enforcement theme.
• Cut-offs and pricing: an order received by the investment firm before 16:00 London time gets today’s NAV even if it reaches the fund later (the COLL pricing rules and the intermediary’s agreement); the fund relies on the platform’s time stamps; the fund’s cut-off is set in its prospectus, with the platforms’ own cut-offs ahead of it.
• Frequent trading and the fund’s anti-dilution and short-term trading rules: funds can charge redemption fees and must be able to request client-level transaction data from omnibus intermediaries to enforce their market timing policies; the platform’s agreement with each fund covers this, the omnibus fees and the prospectus delivery.

A Fund Redemption and an Exchange, With Year-End Distributions

A client redeems fund shares for cash and exchanges between two funds in the same family. Both go through the fund platform to the transfer agent at the day’s NAV; the redemption cash comes back through the fund platform within the fund’s cycle and is paid out; the exchange is a sale and a purchase with a realized gain. The year-end distribution calendar is the tax trap the advisor manages around.

• United Kingdom: redemptions settle at the fund’s cycle through the platform (T+3 or T+4 for most UK authorised funds); income and accumulation units are a tax question outside the ISA and the SIPP (dividend and interest allowances, capital gains tax on disposal); a switch between sub-funds of an umbrella is a disposal for capital gains tax, a conversion between share classes of the same fund is not.
• Redemptions: a UK fund pays within the cycle its prospectus sets, T+3 or T+4; through the fund platform the cash arrives on T+2; redemption fees (up to 2% within a short holding period) and the fund’s frequent trading policy apply; a large redemption in a small fund can be paid in kind, which never happens in retail practice but is in every prospectus.
• Exchanges: within a fund family an exchange avoids a new sales charge and is one instruction, but it is a taxable sale; across families it is a redemption and a purchase with the cash in between; many platforms also offer NTF (no transaction fee) fund supermarkets where the fund pays the platform instead of the client.
• Distributions: a fund distributes its net income and realized gains to holders of record, which lowers the NAV by the same amount; buying just before a record date buys a taxable distribution; the November and December estimates published by the fund companies drive the firm’s calendar, and the rebalancer can be set to avoid purchases before the ex-date in taxable accounts.
• Cost basis: brokers report the cost basis of fund shares bought since 2012 on the annual tax statement; average cost is the default for funds unless the client elects specific identification; losses on a sale followed by a purchase of the same fund (including reinvested distributions) within 30 days are disposal and repurchase; the platform’s tax lot system handles all of it and the advisor explains it.

A Regular Savings Plan Into a Stocks and Shares ISA: the Direct Debit, the Monthly Dealing Day and the Allowance

A fixed amount is collected each month by Direct Debit through Bacs into the client’s stocks and shares ISA, held as client money until the platform’s monthly dealing day, then invested with every other client’s regular savings: the funds through an order routing network at the next valuation point, the ETF on the LSE. The ISA allowance limits the subscriptions, the platform reports the purchases six-monthly, an unpaid collection cancels the month, and the same service pays regular withdrawals tax free in retirement.

• United Kingdom: the regular savings plan collects by Direct Debit through Bacs into a stocks and shares ISA; the platform deals once a month for all its regular savers, and the ISA allowance replaces the US account and tax rules.
• The ISA: the individual savings account takes up to GBP 20,000 of subscriptions a tax year across the cash, the stocks and shares, the innovative finance and the Lifetime ISAs, with the income and the gains free of tax; the platform is the ISA manager approved by HMRC and reports the subscriptions; the government announced in November 2025 a GBP 12,000 cap on the cash ISA subscriptions for the under-65s from 6 April 2027, the rest of the allowance left for the stocks and shares ISA.
• The Direct Debit: the Bacs scheme’s Direct Debit runs on the three-day cycle with the instruction lodged at the payer’s bank (paperless through AUDDIS), the advance notice of each collection and the Direct Debit Guarantee, under which the payer’s bank refunds at once any payment taken in error and recovers it from the service user’s bank.
• Funds and prices: OEICs and authorised unit trusts are dealt at the next valuation point at a single price (forward pricing); the platform aggregates its clients’ orders into one net order per fund, so the regular savings of thousands of clients cost one deal; contract notes per purchase are not needed for regular investments into funds, where the six-monthly information under COBS 16A suffices.
• Client assets: the cash between the collection and the dealing day is client money under CASS 7 and the units are custody assets under CASS 6 in the platform’s nominee, ring-fenced from the platform’s creditors; the FSCS covers a platform failure for up to GBP 85,000 of a client’s investments (the client money and the assets that cannot be returned).

The Distribution Agreement, Share Classes and the Retail Distribution Review

What makes a wealth manager a fund distributor: the selling agreement with each fund company, the due diligence that puts a fund on the shelf, the share class policy by account type, and the money that flows from the fund company to the firm and the platform (loads and concessions, trailer fee trails, sub-accounting fees, revenue sharing). The disclosures and the compliance tests exist because these flows are conflicts.

• United Kingdom: the distribution agreement between the fund house and the platform or the firm sets the share classes and the data flows, not the pay: commission on advised sales was banned by the Retail Distribution Review in 2013 and platform rebates by the platform rules in 2014, so the client pays the adviser and the platform directly and the clean classes replaced the bundled ones; product governance (PROD) defines the target market, the fund house publishes its value assessment every year and the Consumer Duty’s fair value tests the price.
• Who sells funds: private banks and large networks, independent investment firms, adviser firms through custodial platforms, banks and insurers; the fund company’s distributor (a limited-purpose investment firm) signs selling agreements with each, and the large platforms’ fund supermarkets (Hargreaves Lansdown, Fidelity FundsNetwork, AJ Bell) stand between many funds and many advisors with their own NTF and sub-accounting economics.
• Economics: a load fund pays the firm at the sale (concession) and over time (trailer fee); an advisory program pays the firm from the client’s advisory fee and uses no-load classes; the fund company pays the platform for omnibus sub-accounting and sometimes the firm for shelf access; the regulators’ concern is that the firm’s revenue, not the client’s interest, picks the class or the fund, hence COBS suitability’s conflict obligation and the FCA’s share class cases.
• Operations behind the shelf: fund data (classes, ISINs, cut-offs, minimums, the fund’s anti-dilution and short-term trading rules terms, prospectus versions) maintained on the platform and in the firm’s systems; fee discount tracking across the household (rights of accumulation and letters of intent); C share conversion schedules; the monthly fee reconciliations with each fund company; the quarterly disclosure updates.
• The connection to the asset manager page: the subscriptions and redemptions that reach the fund’s transfer agent (see the buy-side page, Cash and Liquidity and Portfolio Construction) are the sum of these orders from every distributor; the omnibus account hides the clients from the fund, and the fund’s anti-dilution and short-term trading rules data and the sub-accounting fees exist to bridge that.

Individual Bonds and Fixed-Rate Deposits, Secondary and New Issue

An advisor builds a bond ladder from the platform’s bond desk: corporates and a brokered term deposit from inventory and dealer offerings with a disclosed markup (S), and gilts through the platform’s noncompetitive auction bid at the stop yield with no markup (A). The bonds settle into the client’s account at CREST or on CREST, the coupons are swept, and each maturity is reinvested in a new rung.

• United Kingdom: the retail bond desk sells gilts and corporate bonds from inventory or through the London Stock Exchange’s Order Book for Retail Bonds, with the markup inside the price and the costs disclosed under COBS; most sterling corporate bonds carry £100,000 minimum denominations, so retail clients hold them through funds; gilts can also be bought through the DMO’s purchase and sale service at Computershare; fixed-rate bonds and notice accounts with the group’s bank or a deposit platform replace brokered CDs, covered by the FSCS to £85,000 per bank.
• Retail bond trading: the platform’s desk (Hargreaves Lansdown, Fidelity, Pershing and the private banks and the large networks each run one) shows inventory and dealer offerings from the retail marketplaces (the London Stock Exchange’s retail bond order book (ORB), the London Stock Exchange’s retail bond order book (ORB), MarketAxess); the desk trades as principal with a markup or as agent with a commission; since 2018 UK MiFID requires the costs and charges, the markup included, to be disclosed before the trade and on the confirmation.
• Brokered term deposits: issued by banks through investment firms in CREST book-entry form, the FSCS insured up to £120,000 per depositor per bank (the platform tracks the client’s coverage per bank), callable in many cases, tradable in a thin secondary market at the desk’s bid; interest paid through CREST; no early withdrawal, only a sale.
• gilt auctions for retail: the platform submits noncompetitive bids for its clients in a gilt-edged market maker’s bid at the DMO’s auction; every noncompetitive bidder receives the stop yield; retail investors can buy gilts through the DMO’s purchase and sale service or on the London Stock Exchange’s order book for retail bonds (ORB) through a broker; secondary gilts from the desk carry no markup at most platforms but a bid-ask spread.
• Sub-sovereign and agency bonds for individuals are the same flow; a bond ladder at scale is usually a discretionary mandate run by a bond manager (see Models and Managed Accounts, and the buy-side page, Sub-Sovereigns, for the manager’s side).

A Structured Note From an Issuer Through a Distribution Platform

The advisor selects a note from the month’s offering calendar on the firm’s structured product platform, the issuer prices it and files the supplement, the firm books it to the client at par and earns a selling concession, and the note is issued into CREST at the closing. For three years the issuer publishes a value and a bid; at maturity the payoff is paid through CREST. The note is the issuer’s unsecured debt, which drives the suitability and the concentration limits.

• United Kingdom: structured products reach retail clients as structured deposits (FSCS-protected) and structured plans from the providers (Walker Crips, Meteor, Investec, Causeway) sold through advisers and the private banks, mostly autocallables on the FTSE 100, with a KID under the PRIIPs rules until the FCA’s consumer composite investments regime replaces it, product governance and the appropriateness or suitability tests; the issuer or the provider makes the secondary market, with no exchange quote for most plans.
• The retail structured note market: about GBP 100 to 150 billion a year of notes issued under the banks’ base prospectuses issued by the large banks and sold through private banks and large networks, private banks, independent investment firms and adviser firms, increasingly on platforms (the issuers’ platforms, Walker Crips, Meteor) that carry the calendar, the education, the order aggregation and the lifecycle events; the issuer’s side is on the sell-side page (Equities, Structured Notes).
• Economics and disclosure: the client pays 100; the issuer’s estimated value (the model value of the embedded derivative and funding) is disclosed in the supplement, typically 96 to 98; the gap is the selling concession to the distributor, the issuer’s hedging costs and its margin; the FCA’s guidance and COBS suitability make the estimated value, the credit risk and the liquidity part of the recommendation.
• Life and liquidity: no exchange trading; the issuer’s desk makes a bid, usually at a discount to model value, so the note is held to maturity; autocallable and income structures bring observation dates, coupons and early redemption events the platform tracks and the advisor must explain; issuer credit (Lehman’s notes in 2008) is the structural risk.
• Operations: the note is a CREST-eligible ISIN issued at the closing; the platform books it at par and pays the issuer net of the concession; the firm’s security master needs the full term sheet to value, report and alert; tax treatment varies by structure and is taken from the supplement.

A Unified Managed Account Rebalanced Across Sleeves

One client account holds several models and managers as sleeves. The overlay manager (the firm’s engine) merges the managers’ model updates, the client’s cash event and the account’s rules into one set of trades, the desk aggregates them with every other UMA on the same models, the platform executes and settles them as one account, and the firm splits the account back into sleeves for reporting and pays the managers out of the wrap fee.

• United Kingdom: the unified managed account is a discretionary portfolio management service under COBS, where the firm takes no commission or rebate since the Retail Distribution Review, so the clean share classes and the explicit management fee (with VAT) apply; the allocation across clients follows the firm’s policy, and the platforms’ model portfolio services run the same mandate as a managed portfolio.
• Managed account programs: SMA (one manager, one account), UMA (several sleeves in one account under an overlay manager), model-based programs (the firm trades the managers’ models) and rep-as-PM programs (the advisor runs the portfolio); the sponsor (the wealth firm) charges a wrap fee and pays the managers; Envestnet, Vestmark and the custodians’ platforms run most of the overlay and trading.
• Model delivery versus manager trading: in model delivery the manager publishes weights and the sponsor trades (cheaper, taxable-account friendly, trade rotation handled by the sponsor); in manager-traded SMAs the manager trades the account itself and needs the client’s account at the custodian and its own rotation (sub-sovereign bonds, small caps, international); dual-contract SMAs put the manager under contract with the client directly.
• Tax management in a UMA: loss harvesting across sleeves, disposal and repurchase prevention between managers, transition of legacy positions into the models over time, and tax budgets; direct indexing sleeves extend it to hundreds of stocks; the tax alpha is the overlay manager’s pitch.
• Fees and disclosure: the wrap fee (the ex ante costs and charges disclosure) covers advice, overlay, trading and custody; the manager’s share is paid by the sponsor; the FCA’s wrap fee examinations look at trading away (manager-traded sleeves paying commissions outside the wrap), best execution and whether low-activity accounts should be in a wrap program at all.

A Third-Party Manager, Model Delivery and Manager-Traded

A client’s money is run by an outside manager in two ways: the manager delivers a model the firm trades in the client’s account (D), or the manager trades the account itself at the custodian under a limited power of attorney (T). The firm selects, sets up, monitors and bills; the manager decides and, in the T case, executes; the custodian holds and settles. The step-out trade is where the two models diverge on cost.

• United Kingdom: the third-party manager is a discretionary fund manager authorised by the FCA, delivering a model to the platform (a model portfolio service) or managing the account itself; the adviser keeps the client relationship and the suitability duty, the manager the mandate, and the FCA’s agent-as-client rules settle whose client the investor is.
• The SMA industry: over GBP 2 trillion in sponsor programs at the private banks and the large networks, independent investment firms and adviser firm platforms, with model delivery now the majority for equities and manager trading remaining for fixed income (sub-sovereign bonds, ladders), small caps and international; the managers are the asset managers of the buy-side page, for whom SMAs are a distribution channel with thousands of small accounts.
• Trading away and step-outs: a manager-traded sleeve that executes with outside dealers settles the trades into the client’s account at the custodian with any markup or commission paid outside the wrap fee; the FCA requires sponsors to disclose and monitor this, and manager due diligence asks for step-out statistics.
• Setup burden: each SMA needs the manager’s paperwork, the restrictions coded at the manager and the firm, the custodian authority (T), the fee mapping and the reporting feed; onboarding a new manager onto a platform takes weeks and is why model hubs and the large platforms’ manager marketplaces exist.
• Oversight: the sponsor owes the client ongoing due diligence on the managers it offers; performance dispersion, style consistency, personnel changes and the manager’s own regulatory record are the standard checks; a manager termination means a transition of the accounts to another manager or a model, traded by the firm.

Client Money, the Group’s Bank and Money Market Funds

Uninvested cash in a client account is swept every night into group bank deposits through the platform’s omnibus accounts (B) or into a money market fund through the fund platform (M), and drawn back the same day when the client spends or the advisor trades. The rate the client earns and the fee the platform collects differ by a lot between the two, so the default, the disclosure and the advisor’s cash review are regulated.

• United Kingdom: an investment firm holds client money in client bank accounts on trust under CASS 7, reconciled daily, with the interest retained disclosed and tested against the Consumer Duty since the FCA’s 2024 review; a bank-owned firm holds it as deposits of the group’s bank; the FSCS covers £120,000 per person per bank, looking through the client money pool; money market funds under the UK MMF rules are the alternative.
• Sweep economics: the platforms’ bank deposit programs (the group banks of the private banks and the online banks, and the partner banks of the independent platforms) earn the spread between the SONIA rate and the client rate, one of the largest revenue lines of a retail brokerage; money fund sweeps pay the platform a servicing fee instead; the client’s choice and the default are disclosed in the cash placement terms.
• Regulation: CASS 7 requires client money to be held in client bank accounts on trust and disclosed, and the FCA’s Consumer Duty work on the interest retained on client cash (2024) is about the value for money of the cash arrangements.
• Operations: the platform runs the sweep after the close from the free credit balance, allocates deposits across the group’s bank within the FSCS limit per client, draws them back intraday, and keeps the client-level record the banks do not have; money fund sweeps run through the fund platform with the fund’s last NAV strike of the day.
• Cash alternatives the advisor can use: purchased money funds (not the sweep), UK Treasury bills and term deposits (see Bonds and term deposits), high-yield savings at the firm’s bank, and for larger balances a gilt ladder; the choice is part of the plan and the quarterly review.

Fixed-Term Savings Through a Cash Platform: the Partner Banks, the FSCS Per License and the Cash ISA

A private client’s cash placed in fixed-rate bonds at several banks through a cash savings platform: the client money held in trust under CASS 7, the deposits opened in the client’s name at each partner bank within the FSCS limit of GBP 120,000 per person per banking license, interest paid gross against the personal savings allowance or tax free in a cash ISA, and the maturity rolled or paid out on the client’s instructions.

• United Kingdom: fixed-rate bonds through a cash savings platform take the place of the brokered CDs: the client money is held on trust under CASS 7 and the deposits are opened at the partner banks in the client’s name, under the FSCS cover of GBP 120,000 per person per banking license; there is no secondary market.
• Cash platforms: a cash savings platform (or the cash service of a wealth manager or a pension platform) is authorised by the FCA, holds the client money under CASS 7 and opens the deposits at the partner banks in the client’s name or through a trust; the client deals with one platform while the deposits sit at many banks; the platform is paid by the banks through the rate.
• The FSCS cover: GBP 120,000 per person per banking license since December 1, 2025 (GBP 85,000 before), with brands sharing a license counted together; temporary high balances (from a home sale, an inheritance, an insurance payout) are covered at a higher limit for six months; the client money at the platform is protected by the trust if the platform fails, and the deposits by the FSCS if a bank fails.
• Tax: savings interest is paid gross and taxed as income above the personal savings allowance and the starting rate for savings; the cash ISA shelters GBP 20,000 a year (the overall ISA allowance), with the cash ISA limit reduced to GBP 12,000 from April 2027 for savers under 65; gilts bought directly are an alternative for a higher rate taxpayer, since the low-coupon gilts’ return is mostly exempt from capital gains tax.
• The Consumer Duty and cash: the FCA’s 2023 to 2025 work on the interest firms pass on to clients’ cash (the retention of interest on platform cash, the fair value of the cash rate) applies to the wealth manager’s cash service; the advisor documents why the client holds cash, at what rate and against which alternatives.

A Securities-Based Line of Credit From the Firm’s Bank

A client borrows against a pledged portfolio instead of selling it: the firm’s bank underwrites a line from the lending value of the pledged account, the client draws by wire, interest accrues at a spread over SONIA, and the bank monitors the collateral every night against the loan with a maintenance call if the ratio breaks. The advisor recommends, documents the conflict and watches the ratio; the custodian codes the account as pledged.

• United Kingdom: the Lombard loan from the private bank or the group’s bank, secured by the portfolio under a charge over the account, is the UK securities-based line; the loan-to-value by asset class and the margin call follow the bank’s credit policy, the consumer credit rules apply unless the high net worth exemption is used, and the suitability assessment covers the leverage.
• Securities-based lending: the private banks and the large networks and private banks lend hundreds of billions against client portfolios through their affiliated banks; adviser firms arrange the same through their custodians’ banks or third-party lenders; the purpose is anything except buying securities (liquidity, real estate, taxes, bridge financing); a margin loan is the brokerage equivalent for securities purchases (see Margin Loan).
• Terms: lending values by asset type (higher for gilts and diversified funds, lower or zero for concentrated, illiquid or volatile holdings), a floating rate over SONIA by loan size, interest-only with no maturity, a maintenance requirement and the bank’s right to sell collateral; the FCA’s rules and the FCA’s guidance address the suitability and the disclosure of the risks.
• Operations: the pledge is a control agreement among the client, the bank and the custodian; the custodian codes the account, restricts withdrawals and sends positions and prices to the bank nightly; the advisor workstation shows the lending value ratio; calls are issued by the bank and worked with the advisor.
• Conflicts and supervision: the firm earns the spread and the advisor may be compensated on loans, so recommendations are supervised for purpose, suitability and concentration; firms limit loans against the client’s own firm stock and against accounts in the advisor’s book that are already leveraged.

A Margin Loan Under the Firm’s Margin Policy

A client buys securities with half the money borrowed from the platform’s investment firm under the firm’s margin policy. The debit accrues interest at the platform’s margin rate, the broker may rehypothecate part of the client’s securities to finance it, and every night the margin system tests the account’s equity against the maintenance requirement; a fall in the stock brings a call, met with cash or by a forced sale. The firm’s controls are approval, house requirements and supervision.

• United Kingdom: there is no Regulation T; the firm sets its own initial and maintenance margins by security under its credit policy and the IFPR or the CRR capital treatment, and the client’s securities may be used only under a title transfer arrangement or with express consent under CASS; most UK retail leverage runs through CFDs and spread bets instead, under the FCA’s leverage limits (30:1 to 2:1) and the 50% margin close-out rule.
• Margin policy and maintenance: there is no regulatory initial margin in the UK; the firm sets its initial requirement (commonly 50%) and its maintenance requirement (25 to 40%) by security under its credit policy and the CRR or IFPR capital treatment, higher for concentrated or low-priced stocks; the online banks and the online brokers that offer margin run it as a Lombard loan with lending values by asset; portfolio margin (risk-based) is available to larger accounts at some firms.
• The broker’s side: the debit is funded by the investment firm’s own capital, bank loans and the rehypothecation of client securities within the client’s consent under the CASS rules on the use of client assets under the CASS rules; fully paid securities cannot be used; the margin interest is a core revenue line; see the sell-side page (Inside the Bank, Prime Brokerage Financing) for the institutional version of the same mechanics.
• Supervision: margin recommendations in brokerage accounts fall under COBS suitability; advisory accounts generally do not use margin (and wrap fees on borrowed money are a conflict the FCA flags); the firm monitors concentration, house calls, forced sales and the advisor’s role in self-directed margin, and sends the margin disclosure statement yearly.
• Alternatives: a securities-based loan (for any purpose but securities), a pledged asset line from the firm’s bank, options for leverage without a loan; the margin account is also what allows short selling and the writing of uncovered options, each with its own approval.

Opening and Funding the Accounts

A new client becomes a set of accounts at the custodian: the advisor gathers the profile and proposes the plan, the client signs the agreements and disclosures, the custodian opens the accounts after KYC, the money arrives by wire, Faster Payments, check and pension transfer, and the rebalancer invests it. The compliance review of the recommendations and the fee billing setup close the process.

• United Kingdom: the account opening runs under COBS (client categorisation, the suitability or appropriateness profile, the costs and charges disclosure), the Money Laundering Regulations (identification, beneficial ownership, the source of funds) and the CRS and FATCA self-certifications; the ISA needs the declaration with the national insurance number, the SIPP its application to the scheme administrator, and the Consumer Duty adds the vulnerability flags and the fair value assessment of the service.
• Account types: individual, joint (tenants in common or with rights of survivorship), trust, custodial (minor’s account), the pension wrapper (the SIPP or a personal pension) and the ISA, occupational pension pension transfer, savings plans, and the capacity of each (advisory under UK MiFID, brokerage under the FCA and COBS suitability); the registration and the beneficiary designations are legal documents the firm gets right once.
• Pension transfers: recommending the transfer of a defined contribution scheme into a SIPP is a COBS suitability recommendation, and a transfer out of a defined benefit scheme needs a pension transfer specialist under the FCA’s DB transfer rules with a presumption against transferring; the comparison of the scheme’s costs, guarantees and features with the SIPP’s and a documented rationale are required; the transfer runs provider to provider through Origo, with no tax on a direct transfer.
• KYC and controls: the customer identification program, the UK sanctions lists and PEP screening, the trusted contact person (the FCA’s rules) and the senior investor rules (the FCA’s rules holds on disbursements), the standing letters of authorization for wires (the CASS rules on standing instructions), and the fee debit authority; the custodian and the firm each run their own checks.
• Systems: the CRM (Salesforce, Redtail, Wealthbox), the planning tool (eMoney, MoneyGuide), the advisor workstation and the custodian’s digital account opening with e-signature; account opening is the process the industry has automated most, and the one where a wrong registration or beneficiary costs the most to fix later.

A Portfolio Transfer In Between Platforms: the ISA, the SIPP and the General Account

A client’s wrappers at another platform move in kind without a central utility: the client signs the transfer forms per wrapper, the receiving platform sends the requests through the industry’s transfer messaging and Origo, the delivering platform validates, blocks the accounts and re-registers the lines through CREST, the fund platforms and the managers’ registers over days to weeks, with the book costs and the ISA and pension histories following. What cannot transfer (the platform’s own funds) is sold first. The adviser then transitions the holdings to the plan.

• United Kingdom: there is no central transfer service; the client signs the receiving firm’s transfer form per wrapper, the delivering firm re-registers the positions line by line through CREST (free of payment transfers between nominees) and the fund platforms (re-registration at the fund managers’ registers), the pensions move through Origo, the book costs and the ISA history follow, and the transfer takes weeks under the FCA’s platform transfer rules and the industry’s STAR framework.
• No central utility: ACATS has no UK counterpart; a transfer is a bilateral process between the platforms under the FCA’s transfer rules (COBS 6.1H: in-specie transfers offered, the delivering platform to act promptly, exit fees dropped by the main platforms after the FCA’s market study) and the industry’s STAR framework and electronic messaging (the TeX and Altus standards), with the shares moving in CREST, the funds re-registered at the managers’ registers and the pensions through Origo; the FCA’s reviews of transfer times are the pressure on the slow platforms.
• What does not transfer: the platform’s proprietary funds and the fund classes the new platform does not hold (converted or sold), structured products and certain overseas holdings the new custodian does not carry, derivatives positions (closed and reopened), the annuities and the investment bonds held at the insurers, fractional holdings, and the margin debit, which must be repaid first; the adviser’s pre-review avoids surprises.
• The wrappers: an ISA transfer keeps the wrapper and the current year’s subscriptions must move whole; a pension transfer runs under the pension transfer rules (a defined benefit transfer needs a pension transfer specialist and advice above £30,000), through Origo between the scheme administrators, with the crystallisation history and the protections (the lump sum allowance, the protected tax-free cash) carried over; the general account carries its book costs for the client’s capital gains computation.
• Transfers out: the same flow in reverse when a client leaves; the firm must not delay beyond the FCA’s rules, it charges no exit fee, and the adviser who changes firms takes only the client information the UK GDPR and the restrictive covenants allow (names and contact details, not account data).

The SIPP Year: Contributions With Tax Relief, the Tax-Free Lump Sum and Drawdown

The pension and ISA year from the UK wealth manager’s side: a SIPP contribution by bank transfer with the relief at source the provider claims from HMRC, the ISA subscription before 5 April, the provider’s access options for a retired client under the pension freedoms, the tax-free lump sum and the monthly drawdown taxed through PAYE, and the reporting to HMRC. The adviser plans the tax effects, raises the cash and watches the deadlines; the SIPP operator is the scheme administrator and the trustee holds the assets.

• United Kingdom: the SIPP and the personal pension (tax relief on the contributions within the £60,000 annual allowance, 25% tax free at retirement, the rest taxed as income through PAYE under the pension freedoms, access from 55, 57 from 2028) and the ISA (£20,000 a year, tax free in and out) are the wrappers; the provider is the scheme administrator or the ISA manager approved by HMRC and claims the relief at source, applies PAYE and files the returns; the US mechanics (conversions, required minimum distributions) have no counterpart, and the tax year ends on 5 April.
• The wrappers: the SIPP and the personal pension (tax relief on the way in, 25% tax free on the way out, the rest taxed as income), the workplace pensions under auto-enrolment (the master trusts and the group personal pensions the employer runs), the stocks and shares ISA (£20,000 a year, tax free in and out, with the lifetime ISA for the under-40s and the junior ISA), the general investment account with the capital gains and dividend allowances, and the investment bond for the tax deferral; the adviser’s asset location across them is the planning product.
• The provider’s role: the SIPP operator is the scheme administrator registered with HMRC, claims the relief at source, applies PAYE on the payments, files the returns and holds the assets through its trustee company; the platform runs the ISA as the ISA manager approved by HMRC; the firm advises under COBS 9A and the Consumer Duty, with the pension transfer specialist rules for a defined benefit transfer; a transfer from a workplace scheme to a SIPP is a regulated recommendation and a large flow.
• Operations: contribution coding by tax year with the 5 April cut-off, the relief at source claims and their timing, the annual allowance and tapering checks, the access elections (the lump sum, drawdown, UFPLS, the annuity quotes), the PAYE and the emergency tax reclaims, the transfers in through Origo (weeks, with the ceding scheme’s valuation), death processing under the expression of wishes, and the ISA additional permitted subscription; the pensions dashboards will show the client every pot.
• Tax planning as the product: contributions in high-income years (the relief is worth the marginal rate, with the carry forward), salary sacrifice through the employer, the ISA for the highest-growth assets, the capital gains and dividend allowances in the general account, the timing of the lump sum and the drawdown against the tax bands and the state pension, the inheritance tax position of the pension after April 2027; the adviser’s cash flow model and the client’s accountant share the work.

A Private Fund Through a Feeder and an Interval Fund

A qualified client enters private markets two ways. Through the firm’s feeder on an alternatives platform (F): subscription documents, a commitment called over years by wire from the client’s account, quarterly valuations with a lag, a partnership tax statement and no liquidity. Through an interval fund (I): a registered fund bought through the fund platform at a daily NAV with quarterly repurchase offers and the annual tax statements. The firm’s diligence, the client’s qualification and the household’s illiquid allocation frame both.

• United Kingdom: private funds are sold to professional clients and, under the financial promotion rules, to certified high net worth and sophisticated investors (COBS 4.12), with the LTAF (2021, open to retail clients as a restricted mass market investment since 2023) and the listed investment trusts as the wider routes; a UK AIFM markets under the national rules, a non-UK fund under the national private placement regime; the feeder structures are Cayman, Jersey or Luxembourg vehicles and the alternatives platforms (iCapital, Moonfare, Titanbay) carry the subscriptions.
• Access vehicles: feeder funds on platforms (iCapital, Moonfare, the private banks’ own) pool clients at GBP 100,000 to 250,000 minimums into institutional private equity, credit, real estate and hedge funds for a platform fee; the LTAF (2021, open to retail clients since 2023), the investment trusts listed on the London Stock Exchange and the semi-liquid private funds widen access to retail clients with daily or periodic pricing and limited liquidity; the evergreen private fund is the newest form.
• Qualification: professional clients, and retail clients who opt up under COBS 3 (two of three tests: a portfolio above £500,000, ten significant transactions a quarter over the past year, a year in a professional position), for AIFs marketed under the national private placement regime, with the FCA’s restrictions on promoting non-mainstream pooled investments to retail clients; LTAFs since 2023 for retail clients as restricted mass market investments with the appropriateness test; the firm documents each and the platform re-verifies.
• Operations: subscription document processing, AML on each investor, wire instructions and call-backs for capital calls, position setup at the custodian as a non-CSD asset valued from the administrator’s statements, partnership tax statement collection and distribution, and the liquidity schedule across the household; the alternatives platforms exist because none of this fits a brokerage platform’s standard flow.
• The private fund’s side: the subscription arrives at the fund’s administrator as one feeder investor; capital calls and distributions, the NAV and the partnership tax statement go to the feeder, which allocates them; see the buy-side page for how a manager runs the public side of the same business.

A Lifetime Annuity Bought With a Pension Pot Through the Open Market Option

An insurance product sold through the wealth manager under the pension freedoms: the adviser compares the annuity with drawdown and shops the rate across insurers through the open market option, the client applies with the health questionnaire for an enhanced rate, the SIPP provider transfers the funds to the insurer through Origo, and the insurer pays a guaranteed income for life taxed through PAYE, reporting the policy to the firm and the income to HMRC.

• United Kingdom: the lifetime annuity is bought with pension money under the pension freedoms, with the open market option across the insurers, the enhanced rates for health, the FCA’s annuity comparison rules at the point of sale and the adviser charge instead of commission; the income is taxed through PAYE and the FSCS covers 100% of it if the insurer fails; the investment bond (the onshore and offshore life policies with the 5% tax-deferred withdrawals) is the other insurance wrapper, sold under ICOBS and COBS.
• The annuity market: about £7 billion a year of lifetime annuities bought with pension pots since the pension freedoms of 2015 reduced the market by two-thirds, recovering with the higher rates since 2022; the providers (Aviva, Legal & General, Standard Life, Canada Life, Just, Scottish Widows) compete on the open market option, with the enhanced annuities for health conditions a large share; the FCA’s rules require every provider to show the client how its quote compares with the market.
• Regulation: COBS 9A suitability and the Consumer Duty for the advice, the FCA’s annuity comparison and retirement risk warning rules at the point of sale, the Pension Wise guidance offered before access, the adviser charging rules of the Retail Distribution Review (no commission, a fee agreed with the client), the PRA’s Solvency UK regime for the insurer, the FSCS at 100% of the income if an insurer fails; the firm’s pensions desk reviews every annuity recommendation against drawdown.
• Operations: the adviser’s quotation portal collects the open market quotes, the application goes to the insurer with the questionnaire, the pension transfer runs through Origo from the ceding scheme, the insurer sets up the policy and the PAYE, and the income appears in the firm’s plan from the insurer’s feed; the policy itself is held at the insurer, not the platform, and cannot be transferred once in payment.
• Where it fits the plan: guaranteed income as a floor under the drawdown pot (the state pension, any defined benefit pension and the annuity covering the essential spending), the enhanced rates for the clients in poorer health, the escalation against inflation, the joint life for the spouse, and the trade-off against the flexibility and the death benefits of drawdown; the decision is irreversible, so the comparison is the most scrutinised step.

One Recommendation Through the Firm, Front to Back

A client review becomes recommendations, approvals, orders, executions at the custodian, reconciliations, surveillance, supervisory review, fees and reports. The advisor owns the relationship and the advice, the desk owns the execution, the custodian owns the account, and the control functions evidence that the firm supervised all of it. Most steps run in the workstation, the rebalancer and the custodian’s files.