Building an efficient investment process

Creating and managing an efficient in-house investment process is now more challenging than ever, thanks to the uncertain economic backdrop, and the ever-evolving needs of your clients. But in particular, the introduction of the Consumer Duty, with the requirement to demonstrate that services meet the needs of each client, deliver the right outcome, and provide value, has made running advisory portfolios much more challenging. As a result, the level of expertise, time, and resources required to manage portfolios now far exceeds what was required previously.

The commercial conundrum

To illustrate the current cost pressures on adviser firms, let’s imagine you have a client with £150,000 in an advisory portfolio who pays an ongoing advice fee of 0.5%. That amounts to an annual fee income of £750. With a typical hourly rate for an adviser of, let’s say, £150, this means that if you spend any more than five hours on this imaginary client, they will actually be loss-making for your adviser firm. Faced with such realities, the next question becomes whether you can run an in-depth and efficient investment process, as well as provide a financial planning service, and  - under your Consumer Duty obligations - demonstrate it is delivering appropriate  client outcomes, all within the five hours allotted?

The silver lining

Some advisers will, of course, have the resources and in-house expertise for this, but for many others, this simply isn’t possible. The silver lining is that outsourcing the day-to-day investment management of your client portfolios can alleviate the mounting regulatory strain on you and your business and free-up your time and resources. This helps ensure your clients receive ongoing advice that’s appropriate to their needs, and that’s cost-effective and sustainable. This improves profitability and can help drive positive client outcomes for your clients.

”You may be delegating your investment management process – but you are not delegating your responsibility to your clients”
Andy Miller, Lead Investment Director, Quilter

Client and adviser benefits

Finding the right investment manager to delegate your investment process to reduces the need for expensive in-house investment expertise as well as the analysis systems and regulatory costs that now accompany the management of client portfolios.

If you are still carrying these costs, outsourcing can deliver increased margins as well as a range of other operational, regulatory, and investment efficiencies. It can also deliver greater productivity by reducing the administration and research required to build, monitor, and report on your in-house portfolios.

A broader and more valued advice service

The prospect of outsourcing your investment services may be a cause for concern for you – especially if portfolio management was previously highlighted as a value-add service to your clients. You may be delegating your investment management process – but you are not delegating your responsibility to your clients. In fact, , outsourcing creates greater opportunities to enhance the service you offer.

These ensure that the products and services provided align with client needs, and that the advice package delivers the right outcome. This can include holistic tax planning advice and support, behavioural coaching, and, of course, the work involved in reviewing existing goals, setting new ones, or using cashflow modelling tools to illustrate the journey.

Aligning interests

When done properly, outsourcing your investment service can be seen as a natural extension of your firm’s advice service. It allows you to focus on aligning solutions with your clients’ needs and helping them achieve their financial goals.

Outsourcing also enables your clients to benefit from an enhanced investment process. Whether that’s better research capabilities, a wider range of investment options and asset classes, more developed responsible and sustainable investment options, or the attraction of tapping into a more robust due diligence process. Additionally, the requirements under the Consumer Duty, such as Assessment of Value, will be done for you.

All these elements ultimately help to deliver better client outcomes, and rigorously demonstrate that you are doing so.

Where outsourcing proves its worth is in reducing the regulatory risks shouldered by advisers, helping to reduce costs and to increase profitability, and to underpin stronger client outcomes.

For advisers and their clients, there’s never been a more appropriate time to consider the right investment manager to partner with to manage your firm’s investment process.

Outsourcing to WealthSelect

For many advisers, utilising a reputable managed portfolio service like WealthSelect will be the solution to these regulatory, commercial and client considerations.

WealthSelect consists of 56 portfolios including responsible investment options with a choice of active, passive, and blended investment approaches, to offer a choice of pricing points, and eight different, forward-looking risk levels.

WealthSelect is underpinned by an established investment team with a robust and rigorous process. It has over 30 dedicated investment professionals ensuring the best investment choices are made for the best client outcomes.

Click here to find out more about the WealthSelect Managed Portfolio Service.

Important information

Past performance is not a guide to future performance and may not be repeated. Investment involves risk. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money. Exchange rates may cause the value of overseas investments to rise or fall.

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The WealthSelect Managed Portfolio Service is provided by Quilter Investment Platform Limited and Quilter Life & Pensions Limited. “Quilter” is the trading name of Quilter Investment Platform Limited (which also provides an Individual Savings Account (ISA), Junior ISA (JISA) and Collective Investment Account (CIA)) and Quilter Life & Pensions Limited (which also provides a Collective Retirement Account (CRA) and Collective Investment Bonds (CIB)).

Quilter Investment Platform Limited and Quilter Life & Pensions Limited are registered in England and Wales under numbers 1680071 and 4163431 respectively. Registered office at Senator House, 85 Queen Victoria Street, London, United Kingdom, EC4V 4AB. Quilter Investment Platform Limited is authorised and regulated by the Financial Conduct Authority. Quilter Life & Pensions Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Their Financial Services register numbers are 165359 and 207977 respectively. VAT number 386 1301 59.

Quilter uses all reasonable skill and care in compiling the information in this communication and in ensuring its accuracy, but no assurances or warranties are given. You should not rely on the information in this communication in making investment decisions. Nothing in this communication constitutes advice or personal recommendation.

Data from third parties (“Third-Party Data”) may be included in this communication and those third parties do not accept any liability for errors and omissions. Therefore, you should make sure you understand certain important information, which can be found at www.quilter.com/third-party-data/. Where this communication contains Third-Party Data, Quilter Investors cannot guarantee the accuracy, reliability or completeness of such Third-Party Data and accepts no responsibility or liability whatsoever in respect of such Third-Party Data.