Loss of client control not a concern for DFM option
Advisers do not need to worry about the loss of client control if they choose to outsource their clients’ investments to a discretionary investment manager, Chris Mayo has said.
“With the use of platforms, the DFM has limited visibility or direct access to the client portfolios, leaving the adviser in full control of the client relationship,” the investment director at Wellian Investment Solutions said.
According to the Kent-based DFM, clients could benefit from a combination of platforms and model portfolios, and advisers should adopt a “best of both worlds” approach for their outsourcing requirements.
Mr Mayo said a model portfolio on a platform was more tax efficient than a single fund that does not pay interest. He added it was beneficial for smaller clients as it provided access to many platforms, as well as giving them a manager’s expertise for a fraction of the cost.
“We have always said that the three top adviser concerns can be summed up with the ‘three Cs’: compliance, cost and control. A combined outsourcing solution is beneficial when addressing these points, especially with the new pension freedoms which gives advisers an opportunity to look for more creative solutions for their clients,” he added.
Adviser view
Ray Galt, director of Glasgow-based Macarthur Denton Asset Management, said: “I am certain DFMs do offer a service and that advisers use them for legitimate reasons. But whether I wholly trust them – the jury is out on that one.
“I have seen many instances of the big providers leaving advisers out of the process, giving clients the idea that their relationship with an adviser is less important. So I am skeptical and have chosen not to use DFMs.”
