A survey of IFA delegates at a series of Unique Boutiques conferences in January showed most intermediaries plan to retain control over asset allocation following the implementation of RDR, but the outsourcing of investment decisions continues to be a significant trend.
Just over two-thirds of IFAs questioned said they intended to continue making asset allocation decisions on behalf of clients, while 40% plan to use external model portfolios or outsource management to DFMs.
Clearly there is a small amount of overlap here, with some intermediaries looking to be in charge of asset allocation decisions but cede the fund selection responsibilities to others.
Some DFMs have already started to offer their managed and modelled portfolios on various platforms in preparation.
DFM moves
Heartwood is one boutique wealth and investment manager that has recently teamed up with platform providers to give IFAs access to its investment offering. Since then it has also added a defensive fund to its multi-asset range, so must think its target IFA market will respond to the multi-asset buzzword.
Just yesterday, JM Finn also announced it had been approved as a DFM on Ascentric and it hopes to offer a service integrating an adviser’s investment philosophy with their own proposition.
JM Finn’s director of intermediary sales, Mike Mount, said: "Financial advisers have told us they are interested in working with a DFM but they want to maintain control of client relationship and custody of the client’s assets."
Fund houses’ retaliation
Fund houses also hope they might be able to tap into such a desire, using the bait of their multi-asset ranges.
Fidelity today announced it was expanding its multi-asset range by renaming an established fund, the Retirement Income Fund the Multi-Asset Income Fund, taking its full offering to eight funds.
Ben Waterhouse, head of UK retail sales at Fidelity, said: "In recent years we have looked to enhance our product set and solution set and it’s in response to demand. There’s no question that demand will continue to increase as IFAs seek to industrialise their investment process and the drivers are both regulatory and commercial."
He said part of the motivation behind the name change was just that – changing the name to include multi-asset – but added that it also reflected a move from advisers to invest in fund ranges rather than single funds.
Since Fidelity did not have an income mandate in its multi-asset offering, it was a gap that needed to be filled.
Aviva Investors is another fund group that has stated its intention to move further down the multi-asset route and recently added two funds to its existing range of three and rebranded them Multi-Asset I to V, all of which are managed by Justin Oneukwusi.
This happened just shortly before the group announced it was going to streamline the business by concentrating on its institutional proposition.
Threadneedle too has signalled that it is going to develop a multi-asset range with Toby Nangle former director of multi-asset at Baring Asset Management at the helm.
Demand enough for all?
Waterhouse argues there is room for everyone and said he has spoken to advisers who use some DFMs and some managed solutions from fund groups. "Lower value clients might get the solutions from a manufacturer, while higher value clients might be offered bespoke solutions with a DFM.
"They are both very solid approaches and I think they both have a part to play depending on the requirements of the client and their attitude to fees."
Here at Portfolio Adviser, being lovers of sport, we have to advocate a level playing field. So as the groups jockey for position, readying their multi-asset ranges, it is crucial those DFMs who want to appeal to advisers get their skates on too. (Too many sporting metaphors for one article?)
Are you looking to offer your DFM services to IFAs? What are you doing to appeal to advisers? Let us know below.
