Increasingly discretionary fund managers, known as DFMs, also supply model portfolios through third-party platforms.

For an adviser, one advantage of working with a DFM is the ability for the adviser to outsource their investment proposition to a third party manager who can modify their approach to the adviser’s broader proposition.

However, recent FCA remarks about advisers not being able to offload responsibility for their clients to third parties and ongoing concerns about investors being poached, mean some advisers may be concerned about using DFMs.

While the FCA has remained neutral on the merits of using discretionary fund management, the regulator has recently stressed how important it is that the client understands what are the respective responsibilities of the adviser and the DFM.

This guide addresses those concerns, looks at what an adviser should consider when selecting a DFM and examines what part a DFM should play in an investor’s portfolio.

Supporting material produced by: Mark Barrington, director of the managed funds service at Waverton; Nick Holmes, managing director of Brooks Macdonald Asset Management; Guy Stephens, managing director of Rowan Dartington Signature; Mark Rockliffe, head of intermediary sales at Heartwood Investment Management; Robin Beer, head of intermediaries division at Brewin Dolphin; and Gareth Johnson, head of managed investment services at Brewin Dolphin.