The regulatory framework for discretionary investment management services continues to evolve. Advisers operating within or adjacent to DIMS arrangements need clarity on what this means operationally, what their obligations are, and how the structure of a DIMS engagement affects their own regulatory position.
New Zealand’s DIMS framework sits within the Financial Markets Conduct Act 2013. A DIMS licence authorises the holder to make investment decisions on behalf of clients without requiring client approval for each transaction. This is the structural feature that distinguishes DIMS from execution-only services: the investment discretion rests with the DIMS manager, not the client.
The licence and what it covers
A DIMS licence is issued by the Financial Markets Authority and is specific in scope. The licence defines the types of portfolios that can be managed, the asset classes in which discretion can be exercised, and the client types that can be served. Operating outside the scope of the licence is a serious regulatory matter.
GoCIO holds a DIMS licence. The mandates we manage are constructed and implemented within the scope of that licence, with all required disclosures made to clients through the Service Disclosure Statement and associated documentation. Advisers partnering with GoCIO operate under a model where the investment discretion sits with us, clearly documented and disclosed.
The investment discretion rests with the DIMS manager, not the client. This structural clarity is one of the governance advantages of the model.
What the adviser’s role is within a DIMS arrangement
When an adviser refers a client to a DIMS manager, or operates within a DIMS arrangement, their role shifts. The adviser retains responsibility for suitability: ensuring the DIMS mandate is appropriate for the client’s circumstances, risk profile, and investment objectives. The adviser does not retain discretion over individual portfolio decisions within the mandate. That discretion has been formally delegated to the DIMS manager.
This division of responsibility must be clearly understood and clearly documented. Confusion about where the investment discretion sits creates both regulatory and practical risk. A well-structured DIMS arrangement makes the division explicit, in the client agreement, in the disclosure documents, and in the ongoing communication between the DIMS manager and the adviser.
Disclosure obligations
The FMCA requires DIMS providers to give clients a Service Disclosure Statement before any mandate is established. The SDS must describe the nature of the service, the scope of the discretion being exercised, the fees applicable, the conflicts of interest that exist, and the process for complaints. GoCIO provides a current SDS to all clients and through all adviser partners.
Advisers should be familiar with the content of the SDS for any DIMS provider they work with. The SDS is not a formality. It is the document that defines what the client has agreed to and what the DIMS manager has committed to deliver.
Looking ahead
The FMA has signalled continued focus on DIMS conduct and documentation standards. Advisers who work with providers whose governance and documentation already meet a high standard are in the strongest position as that scrutiny intensifies. GoCIO is designed to provide exactly that standard, both for advisers who want to offer their clients a governed investment service, and for those who want to ensure their own regulatory position is protected through a clearly structured engagement.