There are DFMs out there that will sacrifice providing a quality service just to sell a simple, cost-effective, model portfolio. This may result in missed opportunities for a firm.
Where this approach will work is with businesses that want to keep their brand at the forefront. We know that advisers care very much about their proposition and their clients’ experience and, increasingly, outsourcing is seen a professional and reliable method of delivering an excellent service.
In the past, adviser firms were sceptical of DFMs, and rightly so, as many looked to own the relationship with the client. But partnerships between advisers and DFMs today are very different.
Relationships that are based on partnerships can be far more effective.
DFMs can offer advisers many more services and support to add value to their client relationships, and it is these DFMs that advisers should be seeking out – either when reviewing their current partners, or looking to outsource for the first time.
Mifid II is going to drive further outsourcing of investment services. The impact so far has been significant, but with further rules due to come into force in April, this could be a tipping point for advisers.
If a business is focused on growth then they need to strip out all of the unnecessary admin, and ask themselves why they would not outsource.
Lawrence Cook is director of Thesis Asset Management
