Creating a new model portfolio

Model portfolio name
Enter the name of your model. You should include a reference to your firm name and a descriptor of the model, for example “ABC MPS model 1.”

Minimum initial order value
If required, any minimum limits on the initial investment value should be set up at this stage.

Minimum subsequent order value
If required, minimum limits on the value of additional payments a client can make can also be set up.

Please note: This is at wrap product level, so any minimum limits applied would have to be met ‘per wrap product’ by each client. You can also set this to zero.

Cashflow deposits
You have two options: ‘target’ or ‘align to target’. All clients when they first invest in the model portfolio will buy the underlying assets at the target allocation set by you.

For subsequent payments, these can be applied at the target weighting or ‘align to target’. ‘Align to target’ will buy the most underweight assets for that client, with the purpose of bringing them closer to their target allocation.

Please Note: ‘Align to target’ will not trigger a rebalance; it will just buy the most underweight assets first to bring the client back to the target allocation.

Cashflow withdrawals
You have two options: ‘current’ or ‘align to target’. When a client makes a withdrawal the trades to fulfil the withdrawal can either be proportionately at the client’s current weightings or’ align to target’. ‘Align to target’ will sell the most overweight assets for that client, with the purpose of bringing them closer to their target allocation.

Please Note: ‘Align to target’ will not trigger a rebalance; it will just sell the most overweight assets first to bring the client back to the target allocation.

Model manager
This is the named investment manager aligned to that model. If users are created with ‘investment manager’ level access they will only see the models for the investment manager they are permissioned to. The named investment manager will receive any notifications of a 10% portfolio or leveraged instrument drop.

Decision maker for this model
This is the named individual that is responsible for the decision and execution of a transaction on a reportable instrument (Exchanged Traded Instrument) within the model portfolio.

Once you have recorded details of a decision maker on the ‘MiFIR Data Capture’ page their name will appear in the dropdown menu of the ‘Decision maker for this model’ field. If you select a decision maker their details will be recorded in transaction reports against any reportable transactions for this model portfolio. If you don’t select a decision maker, details of the first decision maker captured on the ‘MiFIR Data Capture’ page will be used by default.

Please Note: ‘Decision maker for this model’ field is not applicable for advised model portfolios.

Benchmark
Choose from a range of indices and create a composite benchmark by selecting an index and adding a weighting to that index. Any benchmarks added will automatically be displayed on the client’s quarterly DIM statement. There is an option to select ‘none’.

May contain MiFIR reportable instruments
This flag has been introduced to identify whether MiFIR reportable instruments (ETIs) will be held in this model. If this flag is left unchecked, ETIs will not be included in the model portfolio. This will allow investors on the Wrap platform to access the model without the appropriate MiFIR identifiers. If the flag is checked then ETIs can be selected and all investors will be required to add the appropriate identifiers to the Wrap platform in order to access the model portfolio.

Please Note: When a model portfolio is created and the flag is left unchecked, once submitted you will be unable to amend this on the system yourself to include ETIs. Aberdeen can amend this flag for you, and we will provide details of any investors who currently hold the model and do not have the appropriate identifiers on the Wrap platform. These investors will be required to provide the appropriate identifier or leave the model portfolio in order to satisfy MiFIR reporting rules.

Search type

There is the facility to search ‘Investment funds’ or ‘Stocks and shares’. Stocks and shares include all listed securities such as ETFs. There are numerous different fields to use to search for an asset.

Example: The ‘Code’ field is the citicode of the fund or you can also search using either of the SEDOL or ISIN codes.

Allocate and select

Once you have found the investment you want, enter the target allocation and press select. The asset will be confirmed in the top panel with the option to ‘remove’ if you want to make a change.

Please Note: The maximum number of investments that can be added to your model is 49 plus the Portfolio Cash Account.

Add cash

Within the top panel, there is an option to ‘Add cash’. This is the proportion of your model portfolio that will be held in the Portfolio Cash Account. This is a distinct account for holding cash within the model portfolio where your Portfolio Manager Fee is paid from and it is not accessible by the client or adviser. Interest, dividends and distributions will also be paid into the portfolio cash account.

Upload investment choice by CSV file

You can upload your choice of investment funds that you want to include in a model portfolio via a CSV file - simply click on the ‘Download Template’ button and you will be presented with a file to fill. Once completed, please upload it to the model portfolio and the data in the file will populate the relevant fields on the ‘Investment Choice’ page. If you click on the ‘Download Template’ button for an existing model portfolio, the CSV file will be pre-populated with the data held on the Investment Choice page.

You must allocate enough cash in the portfolio cash account to cover your Portfolio Manager Fee, Trading Charges and Stamp Duty Reserve Tax.

Manual rebalancing
When you choose manual rebalancing there will be no auto rebalancing of your model portfolio. However, you can still input a tolerance level for each asset. This will not trigger any auto rebalances but it will feed through to the ‘Tolerance Violation Report’ so any clients that have breached the tolerance on an individual asset can be identified.

By tolerance
You can choose to automatically rebalance clients if they breach the tolerance limits you set. You can select a default tolerance across the whole portfolio or enter individual tolerance levels per asset.

How tolerance rebalancing works
The system automatically checks each client account every morning and calculates their current weightings against their target weightings. If any client has breached the tolerance limit on an individual asset, only that client account is rebalanced. This ensures that all clients will remain within the tolerance levels you set whilst only clients that breach those levels are rebalanced. A rebalance will be triggered if the tolerance limit on any asset is breached positive or negative.

Example: If the target allocation of an asset is 10% and a tolerance of 1% is selected and if the holding for a client in that asset was above 11% or below 9% of their portfolio value a rebalance would be automatically triggered.

Please Note: Tolerance rebalance isn’t available for advised model portfolios.

By frequency
You can choose to automatically rebalance clients ‘by frequency’. You specify the ‘next rebalance date’ when setting up the model portfolio and select the frequency that subsequent rebalances are triggered. The frequency options are weekly; fortnightly; monthly; quarterly; half yearly; annually. A rebalance across all client accounts within the model portfolio will be triggered on the frequency you select.

Please Note: If the rebalance falls on a non-working day the rebalance process still takes place and the trades are calculated but they will not be placed until the next available valuation point.

By ‘frequency’ and ‘tolerance’
You have the option to set up auto-rebalancing by’ frequency’ and ‘tolerance’. This will mean that the tolerance check is run daily and individual clients are rebalanced if they were to breach tolerance. On a regular basis, the whole portfolio will also be rebalanced back to the target allocation at the frequency chosen by you.

Please Note: Frequency and tolerance rebalance is not available for advised model portfolios.

You can still choose a manual rebalance at any time – selecting any auto rebalancing options does not stop you doing manual rebalances. In the firm ‘set up’ template there is an option to put a minimum number of days (from 0 to 30) between any auto rebalances.

Documents
This is where you should upload your model portfolio factsheet. The drop down box has options for KIIDs, Long prospectus and stock note. Select factsheet and upload one factsheet per model in PDF format with a filename no longer than 50 characters. The model portfolio factsheet will then be shown to advisers in our ‘Investment Selection Tool’ on the Wrap platform.

Additional information
There is also a range of additional information on the assets and model portfolio including cumulative and discrete performance; asset allocation; sector weightings; top 10 holdings and ongoing fund charge. This data is pulled from Finex (Please note: some new discounted and clean share classes may not have performance history).

Firm permissions (Discretionary Model Portfolios only)
Please ensure that you have the appropriate agreements in place to manage assets on a discretionary basis. If your agreements are with the financial adviser at firm level then you do need to permission your model portfolios by individual adviser firm. Once you have those agreements in place, you can now select ‘Assign Firms’ and search for the adviser firm’s name you want to permission. To make things easy we’ve matched the adviser firm name with how it appears on the Wrap platform.

Once the search results are returned you can ‘select’ the firm you want to permission your portfolios to. The model portfolios will then be available on that adviser’s Wrap platform. This ensures that only clients of adviser firms you have an agreement in place with can invest in your model portfolios.

Please note: When you initially set up a model portfolio you may not have any agreements in place. You still follow the same process and select ‘Assign Firms’ but search for our dummy adviser firm ‘DIM Company’, this will allow us to set up your model portfolio for you.

You can then add and remove firms easily through the edit model portfolio process. This happens immediately and the Wrap platform is updated with firms that are permissioned to your model portfolios.

Adviser permissions (advised model portfolios only)
If you are managing advised model portfolios you can select to permission your model portfolios to individual advisers within your firm. Under the permissions step select “Assign adviser” and you will be able to search for a named individual and permission them to a model portfolio. Once you select a named individual they will be able to access the model portfolio via the Wrap platform.

Model portfolios are permissioned by product wrapper. An asset permissibility check is carried out on this page to ensure assets are tradable for the product selected. By selecting ‘expand’ under ‘Platform’, any assets which are not permissible for a product will be flagged.

Once a model has been set up, it is important you do not remove product wrapper permissions when clients (in the product being removed) are already invested in the model. Doing so would prevent advisers from trading into or out of the model for clients invested via that product.

You can input your charges for managing the model portfolio.

Please Note: Charges cannot be added to advised model portfolios.

Model Portfolio Ongoing Charge
Enter the standard fee you want to charge excluding VAT and the system will automatically add the VAT, if applicable.

Allocation of the ongoing Charge to Pre-Sale and Annual Disclosure Cost Categories
You can provide a breakdown of service costs of your model portfolio fees. This information will be used to divide your model portfolio’s ongoing charge into the MiFID II reporting categories. This information will be used as part of pre-sale and post-sale disclosure to investors via the Wrap platform.

Wrap – Proposition Charges
Select ‘Use Default’. This is to activate your default fee on the Wrap platform.

Wrap – Company Charges
You can apply any discounts to your fee to individual adviser firms. If you want to apply a discount to a firm, select ‘Customise’ and the firms permissioned to your model portfolios will appear. You can then enter the customised fee (excluding VAT) that you want to apply to that firm. If you are applying company specific charges, please make sure that either the default fee checkbox or a specific charge is entered for each assigned firm.

If you have permissioned your model portfolio to all adviser firms you can search for the firms that you want to apply a discount to.

Model Cash
The default option is ‘Model Cash. When the income strategy field is set to ‘Model Cash’, any natural income generated within the model portfolio will be aligned to the cash allocation of the model portfolio.

Wrap Platform Account
When the income strategy field is set to ‘Wrap Platform Account’, any natural income generated within the model portfolio will be moved to the applicable ‘Wrap Platform Account’ once the income has been paid.

Once you have completed your model portfolio, click ‘Create model’ to submit the model and make it live. It may take between 5-7 working days from when a model portfolio is created to it being tradeable on the Wrap platform. If you have selected to switch on authorisations, your create model portfolio instruction will need to be authorised by a second Transact User.

Work in progress/Work submitted
You can also search for any work that is’ in progress’ (actions that have been started but not submitted) or has been submitted under the ‘Model Portfolio Tab’.