Platforms best way to control DFM service

Harry Kerr said this would allow IFAs to keep the assets and value of the service under their control.

He added: “What IFAs entering this kind of operation often do not see until too late is that in signing over the client’s assets and portfolio management to the discretionary fund manager, they are effectively passing on control of a large part of their business.

“The advantage of using a platform to run a discretionary fund manager contract is that the assets stay on the platform and, therefore, in the control of the adviser firm.

“The IFA should be able to say to the client: I have selected a platform for your assets which will allow easy access, switching and overall management of your investments, and I have selected a specialist investment manager in a discretionary fund manager to run the investment side of the portfolio.

“Should it be necessary to change the discretionary fund manager then there is no difficulty in switching mandates. Without a platform difficulty can arise around having to sell and reinvest assets, with the inherent trading and tax cost implications.”

Keith Churchouse, director of Surrey-based Chapters Financial, said: “Transferring your portfolio is not difficult and, in my experience, discretionary fund managers are quite an honourable bunch. With discretionary fund management it is about the relationship you hold with the stockbroker and you should be doing your due diligence when selecting the stockbroker, so I do not think I would agree with that platform.”