The quality of the investment staff at discretionary fund management (DFM) firms has deteriorated, according to research from Defaqto.
The research company said the advisers to whom they spoke were less satisfied than a year ago with the service they receive in 10 of the 14 categories it measured to rank discretionary fund managers.
According to advisers polled the quality of the literature they get from their DFM is the area with the steepest drop in satisfaction since last year, with only 61 per cent of advisers happy compared with 69 per cent last year.
Advisers said the diversity of investments offered by their DFM and the quality of the literature were cited in the survey as the two most important factors for advisers when considering what they want from these money managers.
The quality of investment staff was the next area highlighted, with 84 per cent of advisers happy, compared with 91 per cent a year ago.
According to Defaqto, this may be a reflection of the increasing number of DFMs targeting the adviser market, with staff with the requisite skills and experience being a bit thin on the ground.
Satisfaction category | Importance | Average Score 2017 2016 | |
Investment flexibility – range of assets | 1 | 84% | 83% |
Quality of staff - investment | 1 | 84% | 91% |
Investment flexibility – range of options | 3 | 86% | 83% |
Service | 4 | 84% | 87% |
Ease of doing business | 5 | 83% | 84% |
Existing business administration | 6 | 81% | 83% |
Quality of staff - administration | 7 | 80% | 83% |
Client on-boarding | 8 | 76% | 79% |
Provider financial strength and resource | 9 | 80% | 82% |
Online facilities | 10 | 63% | 63% |
Accessibility | 11 | 66% | 64% |
Quality of literature | 12 | 61% | 69% |
Provider brand | 13 | 71% | 66% |
Remuneration | 14 | 64% | 67% |
Advisers also said they thought there was a general decline in the quality of DFM administrative staff, with 81 per cent satisfied this year, compared with 83 per cent last time.
The overall level of satisfaction has fallen by 2 per cent since last year.
Alistair Cunningham, financial planning director of Wingate Financial Planning, said for mass affluent individuals DFMs are a solution looking for a problem, as I expect most well run advisory firms can offer investment propositions to their clients at lower cost through use of sector funds and/or multi-asset solutions.
He said: "As competition has heated up in the high-net worth space a number of DFMs seem to be racing to offer generic model portfolio solutions, which may not be better than the alternatives."
Pan Andreas, head of insight at Defaqto, said the results show a generally good level of satisfaction with DFM but reveal the industry should not "rest on its laurels."
david.thorpe@ft.com
