DFM value is in quality portfolio reporting: Simon Chamberlain

The chief executive of Devon-based IFA consolidation business Succession told delegates at the Defaqto DFM conference in London last week that fund managers who charge clients 1% and still fail to produce quality portfolio reports are not demonstrating value.

Mr Chamberlain said: “In the past two years, we have put about £1.5bn into fund managers, and 80 per cent of that has gone into DFMs. They have absolutely wiped the floor with the big fund management houses. Why is that? They’re investing in the same stuff. Our advisers say the reason is cosmetic. The DFMs are delivering their information back to the client with portfolios broken down in detail showing them where their money had been invested.”

He added: “Fund managers were giving clients the growth of just one fund, full stop. Clients were not seeing that as value for money.”

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He revealed that the Succession platform saw two major investment managers boost their inflows by £250m in a year after improving the reporting information they offered investors. He said more fund managers should follow suit.

Mr Chamberlain also told delegates that IFAs should move all clients to a managed portfolio service based on risk and abandon “trying to be a fund manager”. He said advisers should focus on life planning and cashflow management.

Adviser view

Chris Gilchrist, director of Somerset-based IFA Five Ways Financial Planning, said: “Clients value being able to see their investment portfolios and know where exactly their money is kept. We use a platform that produces beautiful reports for our clients for that reason. More of the individual fund managers and unitised DFMs are now building this sort of reporting system, and costs are coming down across the DFM market at the speed of light. Advisers might be better holding off choosing a DFM for another six months to see the benefits of that.”