Joe Public’s perception of ‘outsourcing’ is probably a call centre based somewhere in Poona or Peterborough.

However, for the financial services industry, it is a tried and tested method of getting things done. Companies outsource aspects of their business, such as HR and payroll, accounting and legal, technology and design.

When it comes to investments, many advisory firms now outsource to a third-party provider, such as a discretionary fund manager, or through a platform to a managed portfolio service. 

Since the Retail Distribution Review (RDR) came into effect in UK financial legislation, advisers have been attempting to cut costs, improve compliance, remove the need to manage the investment portfolios themselves and step back from managing client assets. 

Instead, many advisers are now seeking to outsource investment decisions so they can focus instead on long-term financial planning, client reviews and building the business – things which time would not allow if they were continually managing client money.

But while this seems like a great solution, there are drawbacks, which this guide will explore, not least the complicated questions of who owns the client or whether all clients will end up treated as a homogenized entity by the third party.

This guide will explore the reasons behind the rise of outsourced models, ascertain who owns the client in the eyes of the FCA, what sort of business should be outsourced – and why – and provide a checklist for advisers considering outsourcing part or all of their investment business.

Contributors to this guide: Rohit Narang, chief operating officer for Intelenet Global Services; Mickey Morrissey, head of distribution for Smith & Williamson; Lawrence Cook, business development director at Thesis Asset Management; Emily Booth, senior investment manager for Parmenion Investment Management; Peter Mullins, head of business development at European Wealth; the Financial Conduct Authority.

simoney.kyriakou@ft.com