Investments  

DFMs criticised for not submitting performance data

Advisers have warned discretionary managers they could miss out on adviser business if they refuse to send in performance data to services such as Asset Risk Consultants (Arc).

Arc recently published its latest quarterly list of firms that are providing it with performance data, showing that Brewin Dolphin, Ashcourt Rowan, Rowan Dartington, Brown Shipley and London & Capital are among the firms that have not yet signed up.

Aj Somal, certified financial planner at Aurora Financial Planning, said some discretionary managers were shown “in a bad light” by not submitting comparative performance data.

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He said: “With discretionary managers marketing themselves more to advisers all the time, that information would be useful to us to show performance.

“In terms of due diligence it is one of the reasons why we haven’s chosen certain discretionary managers.”

Mr Somal questioned whether firms’ reluctance to sign up to Arc indicated they were “hiding something like poor performance”, although he did acknowledge that costs may prohibit smaller discretionary managers from signing up.

The Arc service costs discretionary managers £25,000 a year and is only available to those with at least £250m in assets under management.

Minesh Patel, managing director of EA Financial Solutions, said he did not know why discretionary managers trying to expand into the adviser market would withhold performance figures.

He added that he would be “very uncomfortable” using a discretionary manager that did not have performance data that could be compared against peers.

Mr Patel said performance data, along with costs and the level of service, is one of the key reasons for choosing a discretionary manager and for justifying to the client, in terms of due diligence, why a discretionary managers has been chosen.

Charlotte Black, head of corporate affairs at Brewin Dolphin, said the firm had considered sending in data to Arc but did not because Brewin “[does] not believe it gives a report of our performance that is relevant for each of our clients”.

A spokesperson for Sanlam Private Investments said that because it was currently reviewing its “process and benchmarks” the firm “hadn’t felt it was appropriate to submit [the] data”.

Arc collects performance from more than 50 discretionary managers and provides performance comparison reports to discretionary managers. The companies can then show the data to prospective clients.

Arc publishes monthly public performance data on the portfolios it is sent, but does not publicly reveal the performance of individual portfolios.

Instead, it divides them into four risk categories and publishes the average performance figure for the portfolios in the four categories, which make up its private client indices.

In its latest report, for the second quarter of 2013, Arc said that 51 wealth managers had contributed data.