The insight analyst for wealth management at research firm Defaqto said the DFM market had demonstrated “considerable change” over the past three or four years, as the breadth and type of products now available to advisers had changed beyond recognition.
He predicted this would only strengthen demand for discretionary fund management throughout 2014 as many new advisers become aware of various ways to outsource their investment proposition.
Mr Donaldson highlighted an already-buoyant market for DFMs by pointing to statistics from Defaqto which showed that 45 per cent of advisers outsourced their investment propositions in 2013.
Mr Donaldson said: “Discretionary fund management is still relatively new to large segments of the adviser market. As demand and interest continue to increase, so the solutions available continue to evolve.
“The choices and options within the market are already very different from just three or four years ago, so it is important for advisers to keep abreast of how this market is developing.”
However, the popularity of DFMs has also fuelled calls for new industry standards.
A poll by Investec Wealth & Investment last year found that 63 per cent of advisers would support this move, though 68 per cent reported no difficulty in aligning their firm’s approach to client risk assessment and profiling to selected DFMs.
However, advisers such as Andrew Whiteley, partner at Hertfordshire-based Assetfirst, have questioned whether DFMs are affordable enough for those forced to re-think their investment strategies post-RDR.
