Investments  

Another DFM cites ‘slow’ adviser take-up

Jeremy Hippolite, head of UK financial intermediaries for Kleinwort Benson, has become the latest figure in the discretionary manager space to cite “slow” take-up among advisers of the outsourced services on offer across the sector.

Speaking to Financial Adviser’s Simoney Kyriakou, Mr Hippolite said: “In terms of the question of using DFMs or not, IFAs, to a degree, have been slightly slow in some places.

“That said, with the Retail Distribution Review pressurising them to have more sustained servicing and the FCA pressuring them to not manage themselves, and have a robust, repeatable process for investments, this has encouraged them [to do so].”

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His comments come in the wake of an interview with FTAdviser by Gerard Sweeting, director of wealth management at Charles Stanley, in which he admitted adviser interest in Charles Stanley’s DFM model has been “slow” as it represents a “different concept”.

Mr Sweeting, who runs the firm’s three models which were launched in 2011, noted: “I think to be fair, interest has been slow because people like to see a track record, so it’s really only been in the last year that we’ve seen the IFAs that like it, take it up in a reasonable way.

Immediately prior to and since the RDR there have been widespread suggestions that most advisers will outsource their whole investment function to the likes of DFMs, but figures have consistently shown the model is being utilised only selectively.

Research compiled by FTAdviser between January and April 2014 found that 16 per cent of 10,558 advisers said they did ‘outsource’ investments, up slightly from 15 per cent of more than 14,000 advisers between January and June 2013.

The number of advisers who use outsourcing for “some” clients has increased from 15 per cent for the six months to June 2013 to 17 per cent since the turn of 2014.

Mr Hippolite said his business is only looking “for a few dozen relationships” with selected advisers, saying that for his firm this approach had proved “positive” and that the firm had been “welcomed into the space.”

He explained: “We thought let us work with IFAs in the way they actually want to be worked with and structure our pricing accordingly.

“We have a tier structure and where we work very closely with firms, over a period of time, their clients will receive more competitive pricing.”

emma.hughes@ft.com