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Poor attitude to blame for slow DFM take-up

The head of adviser solutions for London-based wealth manager London & Capital said: “Over the past 18 to 24 months, the principal issue we have observed within the DFM space has been the inappropriate deployment of resources on the part of larger houses.”

He said that while many had committed a “small fortune” in marketing their portfolios to advisers, hoping to capitalise on the trend to outsource, some firms appeared to have “neglected to invest in their staff and the quality of their client service”.

He said the culprits were not necessarily the DFMs that had been in the market for a long time, but those who had been recent entrants, lured by the prospect of new business after the introduction of the RDR.

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Mr Leigh said: “I would suggest the houses that are struggling most are the ones that joined the market with a land-grab mentality.”

Adviser view

But Scott Gallacher of Rowley Turton in Leicester said the slow take-up of DFMs by advisers was not so much about the service, but whether advisers wanted to outsource. He said: “Most IFAs have not been convinced by the argument that discretionary fund management is the way to go. They don’t see the need for outsourcing to DFMs, because they don’t see what they add.”