Advisers will soon be able to compare the performance of leading discretionary fund managers’ (DFMs) model portfolios for the first time under a new system devised by FE.
FE has introduced an extension of its Analytics tool, called FE Transmission, which will allow advisers to compare and contrast DFM performance figures net of fees.
The move follows the increasing use of DFMs by the adviser industry, a trend which has grown since the introduction of the RDR but has been hamstrung by the difficulties in comparing different providers.
Although only six DFM firms have so far officially signed up to the service – including Vestra Wealth and Thesis Asset Management – FE said it was in discussions with the rest of the industry and there were several firms close to signing up.
The issues for some DFMs include how to accurately and consistently upload performance data while accounting for fees, and how portfolios are arranged into sectors so that users can compare like for like.
But those who signed up cited transparency and helping advisers’ due diligence as deciding factors.
Advisers have been calling for a DFM performance comparison tool since before the advent of the RDR. Roderic Rennison, director of The Ideas Lab, said in 2013 the lack of a tool to compare model portfolio performance had left “a lot of intermediaries pretty frustrated”.
Another factor hindering performance comparisons had been the hesitancy of DFMs to stand up to scrutiny.