discretionaries alert to retail opportunities

Discretionaries willingness to establish unitised portfolios has helped push the amount of IFAs outsourcing some or all of their investment process up to 42%, according to Defaqto.

discretionaries alert to retail opportunities


In its latest poll carried out this month, the independent research company found that of the 345 advisers questioned 21% stated that they have outsourced to a discretionary manager.

Defaqto concluded that discretionary firms have realised that the adviser market has significant potential, in terms of the volume of client assets under management and, as a result, they have become much more proactive in competing for it.

Wider availability

It added that collectives run by the discretionary managers, once included with the intention of being the building blocks of more bespoke portfolios, are now beginning to be marketed in their own right, with the aim of making discretionary portfolio management available to a wider number of clients.

Fraser Donaldson, Defaqto’s insight analyst for funds, stressed how developments in the past three years have seen discretionary management firms not only becoming interested in the retail market, but develop products specifically for it, such as unitised discretionary services.

He said: “For advisers, unitised portfolios open up investment opportunities to a greater number of people and may therefore be a valuable route for meeting their clients’ needs as well as expanding their business offering.

“There is, however, a temptation for advisers to overlook these funds as there may be the perception that it is not discretionary managers’ speciality. As the regulators will expect these funds to be considered alongside all others, understanding the reasons why discretionary firms may wish to unitise their discretionary portfolios, combined with thorough due diligence, should allay these misconceptions and enable advisers to make the most of the opportunities at hand.

RDR ready

The implementation of the recommendations of RDR is widely expected to be of benefit to discretionaries as the number of IFAs outsourcing accelerates. In 2011, the leading solution of choice was multi-manager, which is used by 26% of the advisers Defaqto polled. However, despite the additional burden of ensuring that they can prove their whole of market status, almost 9 out of 10 IFAs said that they planned to remain under the ‘independent’ tag as opposed to offering ‘restricted’ advice.


Latest Stories