IFAs welcome Cofunds listing of DFM services
Advisers have welcomed Cofunds’ plan to provide wider access to discretionary fund managers (DFMs), but have warned platforms still need to broaden their access to a great range of investments ahead of the RDR.
Cofunds said it would provide users with access to a wider range of DFM services, including model portfolios, in the coming months. The firm said it would announce details of the DFMs that will initially list on the platform in the “near future”.
Previously, the platform only featured model portfolios from OBSR and a handful of discretionary fund manager services.
Martin Bamford, chartered financial planner at Informed Choice, said the move was “an example of fund supermarkets becoming a lot more open in their approach”.
“We will see a lot more of that as the RDR comes into play,” he said.
He added that the move reflected the fact that rival fund supermarkets Skandia and FundsNetwork already offer advisers access to DFMs.
Mr Bamford said that fund supermarkets would be able to compete more easily with wrap providers by expanding their product offerings. However, he said advisers were “most waiting for” platforms to list investment trusts and passive vehicles such as exchange-traded funds - which the FSA has required IFAs to consider along with the whole of the retail investment market after the new RDR rules come into effect at the end of this year.
Damien Fahy, head of research at Dennehy Weller, said it was a “step in the right direction” but he agreed he would like to see more platforms widen their offerings to include exchange-traded funds and investment trusts.
“Anything that broadens investment choice is a positive thing but it all comes down to cost as well,” Mr Fahy said.
He added that “one of the biggest issues is being able to compare DFMs to each other,” with Guernsey-based research firm Asset Risk Consultants (Arc) being one of the only firms in the market providing DFM comparison.
Carl Roberts, technical manager at Wealth and Tax Management, said having the ability to access DFMs across the market via Cofunds would be useful.
But Mr Roberts said his firm was looking to use bespoke portfolios, which he said were still limited via a platform. Bespoke portfolios offer client and advisers investments that are specifically tailored to their needs, whereas model portfolios offer solutions for a broad category of client.
“We always encourage our clients to use independent advice rather than be linked to a particular company or platform,” he said. “But if we can access companies across the market, then the more the merrier.”
Cofunds told Investment Adviser in March that the industry’s main focus in 2012 should be helping advisers to get fee-based charging models up and running ahead of the RDR before enabling advisers to place their clients in model portfolios.