Increased research requirements for independent advisers post-2012 are prompting many to look at outsourcing an element of their investment process to discretionary managers and model portfolios. What are the options for IFAs, and what is the FSA making of this move by advisers to limit their investment liability?
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Exclusive surveys show only a minority consider themselves to have outsourced their investment function.
Morningstar says possibility of discretionary manager poaching clients depends on how you access their service.
Advisers without robust research teams struggle to source and document proposition to the regulator.
Analysis & Opinion
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Defaqto Outsourcing Update: Advisers must review underlying investments as well as comparative costs.
Defaqto Outsourcing Update: Providers have come up with a wide range of funds for various client segments.
Where a DFM also has in-house financial planners, it is possible a client could request to consolidate their affairs.
Essentially there is now tiered market offering ‘off-the-shelf’ solutions and a more bespoke option for the wealthier few.
A DFM expects the adviser to understand their client’s financial needs and objectives.
In the past the regulator has criticised discretionary fund managers for running portfolios that were not suitable.
An essential part of due diligence is to gain a thorough understanding of the DFM’s investment philosophy and the investment process.