A sufficiently wide range of funds and a competitive pricing structure are the essential ingredients of a good model portfolio service, according to financial advisers consulted by FTAdviser.
Minesh Patel, an adviser at EA Financial Solutions in London said the three top considerations for him when choosing a model portfolio were the cost, the past performance, and then the quality of the re-balancing, to enable him to maintain the appropriate risk levels for clients.
He added one of the reasons he intends to use the recently launched Invesco Model Portfolio Service is because it uses the Intelligent Office system to re-balance and get client approvals, which saves adviser time.
Philip Milton, founder at PJ Milton and Co, an advice firm in Devon, designs his own model portfolios, both for clients who also use his advice services, and those who do not.
He said: “What we seek is efficiency, cost effectiveness, and the capacity to use ‘anything’ within our models.”
Mr Patel said that part of the consideration for an adviser centres on cost because, if the adviser has outsourced the investment management, they must justify to the end client the fee they as an adviser receive, and managing the cost of the discretionary fund management or model portfolio service.
Craig Harrison, managing director at Creative Wealth Management in Croydon, said: "We assess them over a number of criteria including qualitative aspects such as how they make their asset allocation decisions, the make up of the investment committee and how they manage conflicts as well as more quantitative aspects such as MPS charges, volatility, Sharpe ratio, portfolio concentration, and practical issues such as platform availability."
david.thorpe@ft.com
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