Nick Georgiadis, head of discretionary fund management at Cazenove, has revealed how he hopes to win business for the company’s model portfolio service (MPS).
The service was launched in 2016, and Mr Georgiadis acknowledged that there has been a flurry of such products into the market in recent years, but he said Cazenove will focus on quality of service rather than price.
He said: "Some model portfolios only rebalance every month or every quarter, whereas we are willing and able to do it as soon as we hear an investment idea.
"I don't really see the point of rebalancing every three months, because by then the idea may not work.
"That is one way I think we are differentiated, as soon as (chief investment officer) Caspar Rock and the team have an idea we can action it in client portfolios to make those tactical changes, whereas I am not sure some of our rivals can do that."
Mr Rock said the fact Cazenove is owned by Schroders and can use the parent company’s distribution network ensures, in his view, that advisers using the service get a higher standard of service than may be the case with rivals.
Mr Georgiadis said he sees increasing demand from advisers who wish to place portfolios as large as £300,000 to £400,000 into a model portfolio.
He said he thinks this is a new trend, as previously financial advisers tended to manage portfolios of that size themselves.
The Cazenove Model Portfolio Service is only available to financial advisers.
Paul Stocks, investment director at the firm of Dobson and Hodge in Doncaster, said he tends not to use model portfolios as he feels clients tend to have more specific needs than can be covered by such a product.
Mr Georgiadis's remarks came after earlier this month the FCA warned the structure and marketing of model portfolio services (MPS) risks misleading investors.
The FCA's 110-page Investment Platforms Market Study interim report stated similar risk labels were applied to very different portfolios and customers may have the wrong idea about the likely risk/returns they face.
The FCA found the information that platforms provide about these model portfolios made comparison difficult, and similar sounding labels (for example, 'cautious', 'conservative', 'balanced') were found to expose investors to significantly different underlying assets and volatility in returns.
According to the regulator's study around 17 per cent of non-advised consumers use the ready-made portfolios their platforms offer.
These consumers were found by the FCA to tend to be the less active platform users, younger and less affluent investors.
david.thorpe@ft.com
