Top Gear

by on 21·10·2022

How to use Jeremy Clarkson as your role model for due diligence

Most people are familiar with the TV show Top Gear – aside from the silly pranks, this show reviews the inner-most workings, latest functionality and performance of the modern cars hitting the market.

From a Lamborghini to a Lada, from a Porsche to a Peugeot, from a Bentley to a Beatle and from a Rolls Royce to a Robin Reliant, they all have their different attributes, styles, functions and capabilities, but essentially, they are all still a car – they all have wheels, a chassis, an engine, a steering wheel and brakes, etc, (although, not my Austin Metro that I bought for €50!) in order to perform a function of getting you from A to B.

However, as we all know, when you come to drive a car, there are some fundamental elements that you want to make sure are running well and are fit for purpose – a kind of ‘kick the tyres’ reassurance that when you get in that car, you know it will do what you want it to do and safely such as:

• The engine is running efficiently and smoothly.
• The management systems are in sync and connected.
• The functionality is working effectively and is suited to your needs.
• The performance is as expected.
• The style is befitting your status.
• The cost to purchase is relative and competitive.
• The running costs are manageable.
• The manufacture is inline with all the latest legislation.
• There are ongoing support systems in place in case of a breakdown.

Well, what does this all have to do with Due Diligence you may be wondering – well, looking at the elements a bit closer – you will see that it is not too dissimilar to what you are looking at when considering which platform provider to use or an investment house or DFM to engage with.

• The engine powering the car is fundamentally the company behind the service – so within our Due Diligence report, we look at the company’s legal entity, their history, the ownership structure, capital adequacy, the financial health and strength to ensure that it can keep the service on the road.
• The management systems are equivalent to the corporate governance, risk management structure, operational systems, compliance, IT, etc. that keep the engine running and at the top of its game.
• The functionality ensures that the service you are requiring covers everything you need it to do, such as client access, CGT reports, tax reporting, risk mapping, etc. – just like electric windows or air conditioning or basics such as windscreen wipers (again something else that didn’t technically work on my Austin Metro!).
• The performance is a good gauge of the company’s success and future success, so looking at the awards, milestones and future developmental plans can give you a good insight into a company’s longevity.
• Now style is very much a personal choice and as we can see in the wrap platform market or DFM/investment range, there is quite a variety of choices from your ‘reasonably priced car’ to your high-end, luxury SUV.
• As with everything, nothing in this life is free so cost is an important factor for both you and your end-client as well all those extras that suddenly appear when you come to sign on the dotted line like alloy wheel cover that you didn’t know you needed! Within our Due Diligence reports, we review in detail all the different costs that may occur for sample portfolio values for both platform services as well as investment houses and DFMs, so that you can see all the types of costs that might apply for you and your clients.
• As with cars, legislative requirements are also an important factor so we endeavour to incorporate all the latest Central Bank of Ireland guidelines within our reports such as SFDR, ESG and regularly update them.
• And finally, investigating the backup support available to you as an adviser on an ongoing basis as well as in case of system failure, user error or a global pandemic - the roadside assistance equivalent so to speak.

Considering a car is a key component of most people’s family life, the same can be said for the wrap platform/investment/DFM that an adviser uses as this is what helps drive the business forward and helps ensure the longevity of your client's relationship with you by providing the best service from a company you can trust.  Our Due Diligence reports provide you with the tools to analyse in depth which company you wish to build this relationship with based on accurate, factual and impartial information.

P.S. For reference I am not the Stig (or am I….)!