Talking Point 

Charges rank top among adviser outsourcing concerns

Charges rank top among adviser outsourcing concerns

Outsourcing investment decisions has become popular with advisers over the past few years but costs and charges are the biggest concerns, research has found.

According to a poll taken among FTAdviser's readership, 46 per cent of advisers said costs and charges presented the biggest challenge when it comes to investment outsourcing.

Some 31 per cent were worried about suitability and making sure the investment proposition and portfolio was appropriate for individual clients both at the point of recommendation and throughout the lifetime of the investment.

Mifid II and other regulatory concerns pressed home for 19 per cent of advisers and only 4 per cent believed the performance and track record of the discretionary fund manager was something about which they should be worried.

Yet one of the drivers towards outsourcing from an advice perspective is the ability to delegate to professional investment managers parts of a client service, such as portfolio management, which then allows advisers to focus more on the client relationship, which is seen as a real value-add for clients.

Lawrence Cook, director of marketing and business development for Thesis Asset Management, a discretionary fund management company which provides outsourced fund management services to advisers, said clients valued the advice relationship and were willing to pay for that.

He said: "Again and again, clients say in surveys the things they value most are not the things that advisers like to outsource, such as the portfolio management.

"Clients value trust in the adviser, a person they can speak to, someone who understands them and makes financial matters understandable.

"Therefore it is not surprising that IFAs are outsourcing to allow them to focus on the things clients value and ergo are willing to pay for." 

This comes after financial advisers told FTAdviser they were worried that cost was a big obstacle when it came to choosing whether and where to outsource a client's investment portfolio.

Earlier this week, Ben Willis, senior investment manager for Whitechurch Securities, said advisers often saw "outsourced solutions as adding fees onto the client, while struggling to justify why they are still charging their fees."

Find out more

Tomorrow (Thursday 15 March), FTAdviser is hosting a panel debate on outsourcing. Panellists will include Joe Tennant of Schroders, Mark Preskett of Morningstar and Robert Hardy of Seven Investment Management.

Join us at 12 for the debate by bookmarking the page here. You can send questions in advance to simoney.kyriakou@ft.com or tweet using @FTAdviser #FTAOnAir or by using the comments field in the live blog at 12 noon tomorrow. 

simoney.kyriakou@ft.com

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