Fiduciary expectations have shifted materially over the past three years. For advice firms and trustees alike, the FMA’s conduct guidance makes clear that investment decisions must be explainable, repeatable, and documented. This is not a future obligation. It is the standard being applied today.
The shift has been gradual but consistent. Each iteration of regulatory guidance from the Financial Markets Authority has moved further from principles-based aspiration toward documented evidence of process. The question regulators are now asking is not whether a firm has good intentions. It is whether those intentions are recorded, reviewable, and defensible.
What the FMA actually expects
The Financial Markets Conduct Act 2013 and its associated conduct obligations create a clear framework. Investment decisions made within a discretionary investment management service must be grounded in defined mandates, supported by documented rationale, and subject to ongoing oversight. The FMA’s 2023 thematic review of DIMS providers found that documentation quality was inconsistent across the industry, and that many firms could not demonstrate how individual portfolio decisions connected to stated investment objectives.
That finding matters. It signals that the regulator is not satisfied with process described in policy documents alone. Evidence of process applied in practice, in a form that can withstand scrutiny, is now the minimum standard.
The question regulators are asking is not whether a firm has good intentions. It is whether those intentions are recorded, reviewable, and defensible.
The practical implications for advice firms
For financial advice firms operating under a delegated investment model, the implications are direct. Where investment decisions are made, or where discretion is exercised on behalf of clients, those decisions must be traceable. The mandate must define what the portfolio is trying to achieve. The investment process must describe how those objectives are pursued. And the outcomes must be monitored against the original intent.
Firms that rely on model portfolios provided by a platform or investment manager bear a governance responsibility even where they have not constructed the portfolio themselves. Selecting a model is itself an investment decision. That selection must be documented and reviewable.
Why this is ultimately constructive
The regulatory direction is sometimes experienced as burden. In practice, a well-documented investment process is a competitive advantage. It gives clients confidence. It reduces concentration of decision-making risk within individual advisers. It protects the firm in the event of staff change. And it provides a foundation for consistent client communication that is grounded in process rather than personality.
GoCIO was built around this premise. The governance framework we apply to partner mandates is designed to meet and exceed the documentation standards the FMA is establishing as the industry norm. Our partners benefit from that infrastructure without building it themselves.
The standard is set now
Advice firms and trustees who have not yet formalised their investment governance documentation are not ahead of a future requirement. They are behind a current one. The practical path forward is structured delegation to a provider whose process is already built to the standard required, and who can evidence that standard on an ongoing basis.
That is precisely the role GoCIO was designed to fill.