Investments  

Quarter of advisers outsource due to lack of expertise

A quarter of financial advisers outsource investment services because they do not have the expertise, according to research by Skandia.

The survey of 671 financial advisers, carried out in September 2013, showed 26 per cent cited lack of knowledge as a reason for recommending third-party multi-asset investment services.

It also found that 65 per cent said access to specialist portfolio management skills – specifically manager selection and asset allocation – as a primary reason for outsourcing.

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James Millard, director of investment at Skandia, said that he expects the demand for high-quality managed solutions to increase. He added that the focus on value for money is more prominent than ever and that outsourced solutions can potentially reduce costs while delivering favourable customer outcomes.

A total of 65 per cent of respondents said they outsourced in order to gain access to specialist portfolio management skills.

In Money Management’s latest DFM survey, the majority of DFMs offer a suite of five to 10 outsourcing products for advisers to choose from.

However, one participant claimed that interest in outsourcing to model portfolios has passed, adding that a one-size-fits-all approach is not what the regulator is looking for.

Why advisers recommend third-party multi-asset investment services
Access to specialist portfolio management skills (manager selection and asset allocation)65%
Risk targeted approach ensures suitability64%
Cost effective for the customer45%
Allows me to focus on understanding my customer33%
Cost effective for me31%
I do not have the expertise26%
Based on a survey of 671 financial advisers in September 2013. Source: Skandia. Copyright: Money Management.