Eight reasons to use discretionary fund managers
More on Discretionary Management
- How Black Monday could expose flaws in DFM selection
- Cazenove eyes tech improvements to aid advisers
- Wellian partners with IFA FiveWays Financial Planning
In focus: Outsourcing Investments
RDR has three main aims: to improve the investment management service to clients, to increase the standards of professionalism for advisers, and to put to rest once and for all the debate around the process by which advisers are paid for their advice.
When it comes to satisfying all three criteria, outsourcing investment decision making to discretionary fund managers is one of the logical choices an adviser can make. So, in true Octopus fashion, here are the eight tentacles that advisers should be looking for from any outsourcing relationship:
1. Keeping control over the client
If you’ve already done the hard work of building a relationship with a client, the last thing you want is to hand that client over to someone else. At Octopus, we are in the business of investment management, not providing advice. Unlike some discretionary managers, we have no interest in taking over the client relationship. In fact, Octopus sells 95% of our investment solutions (including our tax products) through financial advisers.
2. More time to take care of the client base
What would you rather spend your time doing, looking after your clients, or looking after their investments? A useful analogy is to think of the GP/patient relationship. A good GP looks after the patient, but will refer them to a consultant to deal with specialist issues. Similarly, a good adviser will know when to put their client into someone else’s hands, whilst still keeping a watchful eye on their clients’ investments as they progress.
3. Added investment expertise
The investment management world has expanded dramatically in recent years, making it increasingly difficult and time-consuming to keep on top of the latest developments. Octopus has a team of more than 50 investment professionals analysing funds and other investments every day, this is a level of expertise (and a cost) that no advisory business can expect to do by themselves.
4. Enhanced investment performance
Having knowledge of the investment universe doesn’t necessarily translate itself into good returns. All investment managers know how to manage money, but some do it better than others. Octopus doesn’t claim to be specialists in each asset class, rather our skill is to take on the bigger picture and determine which investment categories offer the best returns for the level of risk our clients wish to accept. For this reason, we find the best investment managers available and leverage off their skills for delivering returns, whilst also listening to their insights and allowing them to inform our asset allocation debate.
5. Reporting that adds value to the adviser and client
If you let Octopus take care of your clients’ investments, we will also take care of your client reporting. This saves you time and money. We can provide advisers with a comprehensive monthly market report in a format that makes it easy for advisers to create their own bespoke reports. It includes a review of the economic conditions driving markets over the past month, the performance of each investment profile and any key decisions taken over the month. There’s also a client rebalancing template to use when portfolios are rebalanced. Advisers can always contact the investment manager directly if they have a query.