Investor Directed Portfolio Services

What is an IDPS?   An IDPS is a service offered by a service provider (called an  operator) to an investor, wherein the operator arranges execution of buy and sell orders from the investor, custody of assets held, and provides reporting services to the investor.

The IDPS provides a selection of investment options to the investor.   The key distinguishing feature of this service is that the investor is responsible for making investment decisions.  The IDPS provider does not provide investment advise. 

An example of an IDPS is www.schwab.com where individuals can buy and trade shares and are charged a commission on trades.

Member discretionary master funds and wrap accounts are also examples of IDPSs.

In Australia, only public companies who hold a securities dealers licence may operate an IDPS.

The IDPS is a vehicle for allowing investors access to investment opportunities.   An IDPS operator must ensure that investors using their IDPS have access to the same information available to those investing directly in an investment.  For example, if a public company or a fund issues notices to shareholders,  the operator must ensure that any investor in their database who have invested in that company or fund through that IDPS receive the same information.

Due to this requirement, an IDPS operator must have an arrangement with securities issuers to ensure they (the operator) receive the disclosures.

An IDPS operator must also provide their customer with quarterly reports of transactions and holdings of those customers.  Besides the quarterly reports, customer must also have access to such information on a continuing basis.

Investments made through an IDPS will be put in custody by a party other than the investor.  The operator of the IDPS does not have to be the same entity keeping the securities under custody.

Because an IDPS offers savings to the investor through economies of scale, it is considered an investment scheme.  The economies of scale include pooling of funds from other investors for transaction netting (this is a mechanism by the volume and size of transactions are reduced by identifying transactions which ‘cancel’ out each other)

Schedule driven projects

How many times have you been involved in programs where the most pressing concern of everyone is meeting the schedule? 

Quality (fitness for purpose in this case) is the first to go.  To hell with quality, we need to get this deliverable --- a document, a piece of software, testing, etc. – finished.

Project status reports often show green if the everything is ‘on schedule’.  There is little status reporting on whether things are being done right.

I was involved in a large multi-million dollar program a few of years ago.  Immediately upon joining the program, I saw how badly the system being built will turn out to be.  For example, data input is being designed without consideration of what output is required (how would we know what input is required if we don’t know what output is required?).

I raised and itemised my concerns, but they were brushed off.  The schedule pressure was of paramount importance.

The result was predictable.  It was a very successful program:

• The program came in on schedule (the nth update of the schedule)
• The program came in under budget (the nth adjustment of the budget of course)

Except for the minor fact that:

• The delivered information system was unusable and unused.
• A second remediation program had to be launched two years later to fix the problems of the successful program.

This second program did give long employment to a second set of consultants and employees.

Project Failure

Below is a list of some reasons why projects fail, taken from David Cleland’s chapter ‘Strategic Management’ in “The Field Guide to Project Management” (highlights mine)

Check the list to make sure you are not experiencing any of these in your current project.  If you are, then it’s time to take action to amend the situation!

• Inadequate senior management oversight
• Ineffective planning
• Inappropriate organizational design
• Lack of well-defined and delegated authority and responsibility
• Inefficient system for monitoring, evaluating, and controlling the use
  of resources on the project
• Ineffective contingency planning
• Limited team member participation in the making and execution of decisions on the project
• Unrealistic cost and schedule objectives
• Lack of customer commitment to project
• Limited customer oversight
• Inadequate management information system