TechnologyDec 6 2022

Two thirds of advisers frustrated with DFMs' tech provisions

Search sponsored by
Two thirds of advisers frustrated with DFMs' tech provisions
BySally Hickey

Two thirds of advisers said tech-related issues with their discretionary fund manager services have been a source of frustration, according to research.

Research by Moneyinfo found a third of advisers said service was the biggest problem, with other issues including onerous paperwork (18 per cent), poor user experience (15 per cent) and technical limitations (12 per cent).

Other comments made by advisers include irritation over “too many humans”, “too many systems”, as well as “badly connected” and “time consuming and arduous” systems and a “lack of automation” all contributing to preventing advisers from better serving their clients or taking on more. 

Systems that do not integrate, a lack of e-signatures, poor comparison capabilities on things such as valuations, and too many manual elements were raised as problems by advisers.

Regarding the reasons for moving to a DFM platform, cost (30 per cent) and performance (24 per cent) were the top two cited.

The opportunity to improve [adviser/DFM] relationships by using digital solutions is not being sufficiently exploitedTessa Lee, Moneyinfo

While a lower cost was the most cited reason for switching investment managers, it was not one of the top reasons for choosing one in the first place.

The research was conducted in October, with 250 advice firms surveyed.

Some 28 per cent of advice firms use a single DFM, though two in five (40 per cent) received no technological support with onboarding.

Despite this, 60 per cent said onboarding was easy, or very easy, with only 4 per cent saying the process was difficult. 

Tessa Lee, managing director, Moneyinfo, said as the trend for adviser consolidation builds, and the number of advisers buying in bespoke services or template-based from DFMs increases (according to NextWealth), the appetite for technology to ease those partnerships – in whichever guise it takes – will only head in one direction.

“Our poll showed that technology, admin, automation and better reporting are the driving force for 38 per cent of the market to move assets onto a DFM. 

“This creates a huge opportunity for those investment managers getting those fundamentals working well.”

Perhaps now newer and better performing offerings have come to market more firms will take the opportunity to move assets, she added.

Lee said a significant number of advisers suggested that new clients would be placed with a new DFM.

“But our sense was that things just weren’t quite bad enough for them to go to the effort of moving existing clients across. 

“The question is, is this enough of a reason to not look for a better option?