Weekly Comment - Week 16, 2017The newswires regularly tell us that increasing numbers of international IFAs are engaging with Discretionary Fund Managers (DFMs) to provide more robust investment services for their clients. Although not used by everyone, their popularity has undoubtedly increased and, if used correctly, everybody wins:

The Client’s end up with a well-priced portfolio, aligned to their investment time horizon and risk profile. Holdings in these portfolios (whether active or passive) will have passed robust scrutiny by well-qualified/experienced investment professionals. The Client receives regular reports on how their investments are doing and the rationale behind decisions made on their behalf.

IFAs can take solace in their chosen DFM partner’s pedigree, experience and service standards. Their client proposition can be reinforced by appointing the right people at each stage in the value chain, to help their clients meet their financial objectives.

Partnering with a DFM can also provide commercial benefits; for smaller and growing IFAs, delegating investment decisions to a DFM can help reduce the investment risk to their business, reduce resource requirements, save costs and enable the IFA to focus on the relationship.

Finally, the DFM partner benefits through the growth of their assets under management, its partnership base, and suitably-priced revenue stream.

So, if DFMs can offer real tangible benefits to international IFAs, why aren’t more businesses using them yet? I asked Alan Blythe, the MD of MitonOptimal Isle of Man, a Chartered Financial Planner and former owner of a successful IFA business for over 15 years that very question. Alan responded that “As an IFA, he was always reluctant to use a DFM, because (as well as believing he was doing a good job himself) there was always the fear he would lose some of his best clients to these outsourced investment experts, especially with regards to the large institutional DFMs, whose ability to forget, from one CEO to another, what they had promised, is occasionally self-evident.”

The international wealth management industry is experiencing a much-needed period of change – with the ultimate aim of clients being treated more fairly. As the industry embraces this much-needed change, IFAs also have a right to expect their DFM partners to do more than just deliver one-size fits all solution.

So how does MitonOptimal go about addressing that fear and developing a strong/long-term relationship with our strategic partners? Whilst meeting the needs of the end-client still remains paramount, MitonOptimal’s simple, yet long-held belief and subsequent solution is to ensure that the partnership between the DFM and IFAs is truly symbiotic, we are wholly focused on developing long-term partnerships that better serve the end-client, the IFA and, of course, the DFM, based on trust, respect and performance. To aid this process, we firmly believe that IFAs should also have the freedom to decide on exactly how they prefer to engage with a DFM partner – whether it be a long-term strategic partnership, merely as a named partner or by positioning the DFM as a white-labelled service i.e. a nameless provider of good service (local regulations permitting). This offers the IFA a more tailored solution, one they can feel comfortable with and where everyone understands their role in the partnership.

For International IFAs looking at investment outsourcing, MitonOptimal has a unique insight into the challenges you face. We can offer you powerful investment tools to supercharge your client proposition – in the way that suits your business best.

Contact us for more information.

When One-Size Does Not Fit All

 

 

 

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MitonOptimal UK Limited is part of the MitonOptimal group of companies. Registered in England and Wales No. 09138865. Authorised and regulated by the Financial Conduct Authority.