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Thematic investing - May 2013

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Adviser Guides

Guide to outsourcing fund management – part 2

Published by FTAdviser | May 17, 2012

The nature of discretionary fund management means an adviser is authorising a third party to make decisions on behalf of the client.

It is vital to maker sure the terms of the discretionary fund management relationship are clearly set out and capable of satisfying both client and adviser.

The second of this two-part guide tackles what questions to ask a discretionary fund manager and how to make sure the outsourcing arrangement works today and for the long-term.

Answers supplied by David Lumley, director of Arena Wealth, Mark Soonaye, product director of Octopus Investments, and Carl Lamb, managing director of Almary Green.

IN THIS GUIDE

  1. Q: What due diligence should I do when picking a DFM?

    The steps you take to narrow down your search will need to be extended into the due diligence stage.

  2. Q: How do I explain why I selected a DFM?

    IFAs know the importance of written evidence.

  3. Q: How do I put in place an outsourcing agreement?

    The outsourcing agreement will be a tripartite agreement that clearly sets out each participant’s roles and responsibilities.

  4. Q: What terms and conditions should I expect?

    The terms of the agreement should define the involvement of each party, the remuneration involved and the service levels agreed.

  5. Q: How do I make sure the arrangement works?

    Constant review and assessment is the only way to ensure the arrangement is delivering on its promises.

  6. Q: What if I’m not happy with the arrangement?

    If things are not going to plan, then challenge your partners without delay.

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Outsourcing Guide - Part 2

Q1.  What does Almary Green’s Carl Lamb is important to check with a DFM beyond past performance?

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Q2.  What does Mr Lamb say is important within a client agreement when using a DFM?

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Q3.  What does Octopus’ Mr Soonaye suggest putting into a DFM agreement beyond the ‘usual’ terms?

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Q4.  What does Mr Lamb suggest advisory firms should establish to monitor the DFM arrangement?

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Q5.  What should an adviser do if the DFM arrangement is not working out?

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Q6.  Which rules prevent managers from creating barriers to exit?

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