How to build a CIP — a seven-step process for UK IFA firms

Take a worked example. You're a director at a six-adviser firm in Guildford. Four RIs, two paraplanners, an operations lead, a compliance officer who's there two days a week. You've grown to £210m of AUM mostly through referrals. Your investment work has been — to be honest — whatever the senior adviser believed in for the last fifteen years, with some quiet drift in the model portfolios since then. Your compliance officer flagged at the last quarterly review that "we have a CIP, but I couldn't tell you what's in it without three days of digging." Consumer Duty year-2 is biting. You've decided the firm needs a real CIP — one document, one process, one defensible answer.

What follows is the build sequence we'd run with that firm. It works for a 4-adviser practice and a 30-adviser practice; the work scales but the order doesn't change.

Step 1 — Define your client segments

Start with the book you already have, not with a textbook framework. Pull the client list and group it on the axes that actually change the recommendation:

• Accumulation vs decumulation.Different solution sets. Treat them as separate even if you keep the rest of the segmentation aligned.
• Attitude to risk.Three to five bands is the standard range. Your risk profiler should already enforce this.
• Capacity for loss.Don't conflate with ATR. A high-ATR client with low capacity for loss needs a different solution to a high-ATR client with high capacity.
• Complexity.Mass-affluent, HNW, ultra-HNW. The solution set, the reporting cadence and the platform infrastructure differ.
• Ethical preference.If you offer an ESG/sustainable variant, that's a sub-segment, not an opt-in.

You'll usually land on 4–8 named segments. Each segment should have at least 15–20 clients in it — anything smaller and the segment is really an exception you'll handle case-by-case. Name them. Write the one-line profile per segment. A real client should fit into exactly one.

Step 2 — Set an investment philosophy

One to two pages. Plain English. The questions the document answers:

• What do we believe about markets? (efficient, semi-efficient, exploitable inefficiencies)
• Active or passive — and where each?
• How do we think about asset allocation? Strategic, tactical, both?
• What's our position on ESG/sustainability? Integrated, screened, dedicated solution, available on request?
• What's our position on alternatives, structured products, illiquid assets?
• What's the role of currency exposure for sterling investors?
• What's the rebalancing discipline?

The philosophy is the constitution that the rest of the CIP runs against. Decisions about specific funds get easier once it's written — most "should we add this fund?" debates collapse into "does this fit our philosophy?". If yours is too vague to settle that question, it's not done yet.

Step 3 — Select the solution set per segment

Map each segment to a defined solution. Options, in increasing order of outsourcing:

• Bespoke per client.Rarely the right answer at scale; reserve for genuinely complex clients.
• In-house model portfolios.The firm constructs and rebalances. Requires investment-management capability and platform infrastructure.
• Multi-asset funds.Vanguard LifeStrategy, BlackRock MyMap, HSBC Global Strategy. Low cost, low maintenance, narrow customisation.
• Outsourced model portfolio service (MPS).Discretionary fund manager runs the portfolios; you advise. Many firms now use this for the bulk of the book.
• Bespoke discretionary mandate.Genuine bespoke management by a DFM. HNW segment only.

For each segment, document the solution choice and the reason. "Accumulator, balanced ATR, mid-capacity, mass-affluent — outsourced MPS with [named provider] balanced range, because [stated reason — cost, performance evidence, governance fit, platform access]." That paragraph is the thing the FCA wants to see when they ask "why this solution for this segment?".

Step 4 — Build the research and due-diligence process

Three artefacts to produce here:

The initial due-diligence pack per provider.Whatever provider sits in the solution set, you need a documented due-diligence file: ownership structure, AUM, key-person risk, investment process, performance attribution, fee structure, platform access, regulatory standing, ESG approach where relevant. Defaqto Engage, Morningstar Direct, FE Analytics will pull most of the data; the analysis and the sign-off are yours.

The ongoing review checklist per solution.What you check, every quarter or annually depending on solution type. Performance vs benchmark, drift from mandate, fees, any provider changes (PM departures, ownership changes), any ESG-label changes (SDR labels under FCA rules).

The new-solution evaluation template.When someone proposes adding a new fund or mandate to the CIP, what they have to demonstrate before the investment committee considers it. The template prevents the meeting becoming a sales pitch.

Step 5 — Stand up the governance committee

An investment committee with named members, named chair, written terms of reference, and a meeting cadence (monthly is too often for most firms; quarterly is the working norm). The minutes are the audit trail. They need to capture:

• Who attended
• What was reviewed (which solutions, which segments, what data)
• What was decided (added, removed, retained, flagged for further work)
• The reasoning behind each decision
• Action items with owners and dates

For a firm under ten advisers, the committee is usually the senior partner, the operations or compliance lead, and one external voice — a paraplanner who knows the operational reality, or an external investment consultant for firms that prefer the independent challenge. Above ten advisers, formalise it further; add an investment specialist if you don't have one in-house.

Step 6 — Wire in the Consumer Duty overlay

Post-2023, the CIP can't be a closed loop that ends with "the solution was suitable at point of sale." Consumer Duty pushes outcomes monitoring through the proposition: are clients in each segment getting the outcomes the segment was designed to deliver?

For each segment, define what good looks like — returns versus benchmark over a stated period, fee versus value framing, suitability of solution given any segment-level changes (interest-rate environment, regulatory changes, drawdown sustainability for decumulation segments). The investment committee then reviews outcomes per segment alongside the solution review. The annual fair-value assessment under PRIN 2A.4 falls naturally out of this if it's wired into the same process.

The board's annual report on consumer outcomes is the third piece. The CIP's outcomes data feeds it. If you have to assemble the report from scratch each year, the CIP isn't wired in — fix that this build.

Step 7 — Test the CIP against the existing book

Don't launch the CIP and start applying it forward only. Run a sample — 10% of the book, stratified across your segments — through the new CIP cold. For each client:

• Does the client fit cleanly into one segment? If not, why not — is the segmentation wrong, or is this a genuine exception?
• Does the current investment solution match the CIP's solution set for that segment? If not, what's the migration plan and timeline?
• Where the client is in the right segment with the wrong solution, is the migration in the client's interest or just a tidying exercise?

You will find issues. Most firms find that 5–15% of clients sit in solutions that don't fit any segment cleanly. The migration plan is a separate workstream: which clients move first, what triggers the move (annual review, life event, opportunity at next rebalance), how the cost of moving (CGT, exit charges, platform fees) is weighed against the suitability benefit.

The mechanical infrastructure

The CIP is a firm document; the infrastructure that runs it determines whether it scales. Three things to plan for:

One source of truth for client data.Segment membership, attitude-to-risk score, capacity-for-loss assessment, ethical preference — these should live in one place and flow through to the recommendation and the suitability report. If they live in three places, they drift.

Look-through analytics on the solution set.Whatever the solution looks like at the wrapper level, the investment committee needs to see what's actually held — the underlying asset allocation, the regional exposure, the sector concentration, the fixed-income duration. Morningstar's look-through data feeds this; so does an integrated platform that holds the holdings data live.

Audit trail per client.The recommendation, the suitability fit to segment, the suitability report, the investment committee minute that approved the underlying solution, the annual review record, the outcomes evidence. One trail per client, accessible in fifteen minutes when compliance asks.

Wealth Analyticais built for this end of the workflow — segmentation, recommendation, suitability and review, with the audit trail and analytics in one place. Whatever you use, the test is the same: when compliance asks for the trail on a single client, does it take fifteen minutes or three days?

How long the whole build takes

For a six-adviser firm with reasonable existing documentation: eight to twelve weeks of concentrated work, spread across about three months. Step 1 (segmentation) and Step 2 (philosophy) tend to be quick if there's leadership clarity, slow if there isn't. Step 4 (due diligence) is the longest single workstream — usually three to four weeks. Step 7 (testing against the book) takes two to three weeks and uncovers things the earlier steps assumed away.

The mistake to avoid is treating it as a part-time project with no end date. Block calendar time, name an owner, work in weekly sprints, and ship a v1.0 that you'll improve over the next twelve months rather than a perfect document that takes two years to publish.