Three figures in the discretionary fund management world have said they should not be forced to make their data available through independent services to make comparing them easier.
Lawrence Cook, director of marketing and business development at Thesis Asset Management, said this would create a “pay to play” environment which would stifle innovation.
He was joined in ruling out compulsory subscription to services such as FE Analytics and ARC by Paul Miles, principal of Silverback Consultancy, and Gillian Hepburn, director of DFM comparison site Discus.
Mr Cook said: “Comparisons are still difficult, as not all DFMs subscribe to ARC and not all portfolios can be analysed in FE Analytics.
“I do think it would help advisers if there were agreed standards to which all DFMs reported.
“Obviously anything that helps advisers make better, more informed decisions for their clients is a good thing. But it shouldn’t be compulsory.
“If everyone is obliged to ‘pay to play’, this could create unfair cost barriers to entry, especially for start-ups and niche wealth managers. The last thing we want to do is stifle innovation.”
Mr Miles agreed that it shouldn’t be compulsory, but said DFMs looking to do business in the adviser space would be wise to consider it.
Ms Hepburn said: “I don’t think it should be compulsory, but measuring performance of bespoke portfolios in particular is a challenge.
“If portfolios are truly bespoke and designed to address specific client requirements such as an investment mandate, financial goals or a risk profile then it’s difficult to compare performance other than against the agreed client objectives.”
The panel also addressed the issue of due diligence by financial advisers, which the Financial Conduct Authority looked at earlier this year.
In a thematic review published in January the FCA said it found evidence some advice firms are putting the service they get from platforms above the service their clients get when considering products.
Stephen Gazard, managing director of Sesame Bankhall Group, said: “At the moment, we’re seeing a complete mixed bag. We are concerned that some advisers and firms are unsure about just how much due diligence they need to do when it comes to looking into outsourcing options.
“This is a real worry given the direction of travel we have seen since RDR.”
Barry Neilson, business development director of Nucleus, said: “The regulations in place around DFMs are quite interesting because the FCA has so far been very focused on the fact that the adviser still has the responsibility for suitability of third party products.
“So if an adviser is outsourcing to a DFM, the adviser still has responsibility for making sure the DFM is being used with the right clients in a manner that looks like there is no potential for shoe-horning.”
