In truth, trustworthiness is the virtue most in demand from any professional asset allocator and, given how little the discretionary industry has changed in recent years compared to, say, the IFA world, you’d have to assume that reliability remains its trump card.
Seemingly out of reach from RDR, it is discretionaries that on the face of it seem most likely to benefit and flourish post 31 December, 2012. But, while the companies I have met all believe they are well-placed for the new investment landscape, I suspect some may have underestimated the work yet to be done in winning new business.
Those IFAs looking to outsource find themselves with a multitude of options, and it’s the fund groups that have been among the busiest in recent months ensuring their multi-asset – not multi-manager – products are in good shape.
Multi-asset splurge
In recent weeks we have seen new multi-asset funds from the likes of Investec, Pimco and Fidelity, while Schroders too has gone through a high-profile revamp of its multi-asset offering. Technological advances, and the ease with which asset allocation and fund selection decisions can be made today through platforms and other tools may also help to encourage more IFAs to stick to the task themselves.
This week, Defaqto issued research which found that, of the advisers it questioned, 51% are already outsourcing some or all of their investment process – 26% use discretionaries. It also called on discretionaries to offer sufficient investment flexibility to “stand out” to advisers in the run up to 2013.
“Discretionary managers will need to ensure they appeal to advisers, and an understanding of what other DFMs are offering will be crucial to help them benchmark, shape and promote their service accordingly,” said Fraser Donaldson, insight analyst for funds.
Cost will undoubtedly be a factor, as will performance, experience and reputation – the same criteria that the industry has always been measured on – but real innovation, beyond the traditional risk-rated mandates, is always welcome. I look forward to seeing how many business rise to the challenge next year.
