Recommending a DFM portfolio delivers great client outcomes and establishes the discrete professionalism of the adviser. What is the business logic for the advice firm? The cost to an adviser of maintaining a DFM portfolio recommended to a client is very low. The costs of maintaining an ongoing research and monitoring capability of individual funds or in-house models, to any standard of professionalism are very high. On the revenue side, adviser remuneration derives from the advice work undertaken in the key tasks of initial recommendation and periodic review. It’s simpler for the client to understand.
Finally, one of the true costs to managing investments on a one-at-a-time basis is that it begs the question, who can say what that business is worth? The recent M&A activity in wealth management has been for firms built around professionalised, modelled portfolio solutions.
Patrick Ingram is head of corporate relationships at Parmenion
