LGIM expects growth of bespoke investment services in 2022

LGIM expects growth of bespoke investment services in 2022

Advisers will increasingly want bespoke investment services as they look to align portfolios with their clients' needs, Legal & General Investment Management's head of retail distribution has said.

James Crossley told FTAdviser that by launching their own model portfolios and bespoke portfolios, fund managers could "elevate a product into a service or even a partnership model".

“We are also seeing bespoke arrangements in the form of segregated accounts increase in popularity at the larger national advice firms," he said.

“Of course, many advisers will continue to focus on pooled offerings, but we do anticipate a move towards more bespoke solutions next year.“

ESG will also become standard practice as investors look to do more when it comes to sustainability, he added.

“Increased regulatory pressure around transparency and disclosures may accelerate the trend, especially as it’s expected the Financial Conduct Authority will introduce SFDR-type regulations in the near future. 

“We believe ESG issues are financially material and responsible investing is crucial to mitigate risks, capture opportunities and strengthen long-term returns.”

Searching for returns

Crossley said a key investment theme he has been discussing with adviser clients was where returns will be next.

“Traditionally, when equities haven’t performed well, fixed income has picked up the slack – but the worry this time is that fixed income won’t be able to do this, which creates a perfect storm,” he said.

“Whilst we do understand the concern, we remain positive on equities, as the asset class tends to perform well in both mid and late cycle.”

However, he warned, the current environment demonstrated the need for diversification. 

“As a result, we have seen increasing interest in alternative sources of returns this year," he said.

"Advisers have traditionally invested only a small amount of their clients’ capital in these types of investments, but they recognise the potential risk/return benefits.”