Surge is expected in use of DFM services

This article is part of
Discretionary Fund Management - July 2015

Michael Barrett, consulting director at The Lang Cat, notes that most platforms do provide access to some DFM portfolios, although typically a restricted range. For example, he notes Brewin Dolphin’s portfolios can be accessed via a number of platforms, whereas Standard Life offers access to around eight DFMs.

He says: “Our view would be that the trend to outsource is generally a good thing. It allows advisers to have a much more process-driven and cost-effective business, but more importantly it should ensure the client’s investments are managed by experts, with the adviser still handling the wider financial planning and client relationship.”

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But there are challenges here too. “We do not believe there is any way for an IFA to achieve an effective whole-of-market, time-efficient, quantitative analysis on the full range of outsourced solutions. Fund-charging data is not uniform across the industry, let alone portfolio data.”

Research from The Lang Cat found that around half the advisers it surveyed said accessing data regarding the costs and make-up of DFM portfolios was either “hard” or “very hard”.

In spite of the sector’s progress, Mr Stather-Lodge thinks getting model portfolios on platforms is in itself hard work, adding “there are still some gatekeepers out there”. He says in his experience, platforms are acknowledging the change in distribution and are accepting it.

Philip Scott is a freelance journalist


Patrick Ingram, head of corporate relationships at investment specialist Parmenion, comments on the growing interest in advisory services:

“The World Wealth Report 2015 – by Capgemini and RBC Wealth Management – highlights demand for advisory services is not on the wane, with the highest level of interest coming from younger, high net worth individuals [HNWIs].

Wealth managers are underestimating the interest from all HNWIs in using automated advisory services. The report found only 15.6 per cent of wealth managers in Europe think HNWIs would consider using automated advisory services, when in fact 45.8 per cent of HNWIs when asked directly said they would do so.

Real growth in the advisory sector will only come through innovation. Therefore, the key to tapping into the demand lies in leveraging technology.

Innovation in the way goods and services are delivered has transformed every other sector, yet within wealth management the power of technology to create value lies largely untapped. Advisers and investment managers now both depend on implementing financial technology for their futures.”


Research from Defaqto shows more advisers are outsourcing their investment proposition, with many using platforms as a key tool.

In April 2015, the independent financial research firm published a case study, ‘DFM propositions on platforms’, which outlined a due-diligence checklist for selecting an on-platform DFM service.