Adviser concerns that discretionary fund managers will detract from their business and prove far too expensive is a myth, according to Lawrence Cook.
The business development director for discretionary manager Thesis Asset Management said some advisers have expressed caution over using a discretionary fund manager (DFM) because of a perceived high cost.
He commented: "It is a myth that DFMs, as part of the service, make for a more expensive service".
According to Mr Cook, while there is a cost involved, quite often model portfolios on selected wrap platforms can cost a total of 1.1 per cent a year or 0.7 per cent a year, depending on the type of portfolio and whether it is using active fund managers or a passive strategy.
His comments came as advisers taking a Talking Point survey with FTAdviser said they had a few concerns over outsourcing to a DFM.
They expressed some level of caution over whether it was a service worth paying for, given there could be some issues over who will end up owning the client and whether the investment choice was good enough.
According to 43 per cent of respondents suggested ownership of the client would be their biggest concern, followed by 24 per cent who were anxious about the suitability of the portfolio.
Only 14 per cent thought the investment choices might not be good enough.
Moreover, Mr Cook said using a DFM could help the adviser improve their own profitability, from the "opportunity cost and cost to serve".
He explained: "When not using a DFM, the advisory firm must commit to work to support the investment solution he is running. This work is likely to mean researching, updating the advisory model on the firm’s systems and updating the individual client portfolio.
"The time and resource spent on the above is time and resource that could be spent on something that is more revenue generative, such as spending time with clients, winning new work and networking."