Increasing profitability through innovative model portfolio services – the costs and benefits of outsourcing

Financial Advisory

Financial Advisory

Winning Advisers, Tilney Hall, 13 October 2015

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Sponsor introducing: Ian Hunter, Thesis

Facilitated and written by: Innes Miller, Scydonia Wealth

In this session, the value of allowing clients to set their own benchmarks for investment performance was raised. Advisers were encouraged to move away from the attitude that their primary role is to monitor investments.

The need for more clarity on outsourcing investment was also highlighted. 

Headline finding 1:

For the client, conversations relating to investment performance and portfolio construction are less important than financial planning.

Headline finding 2:

Advisers still largely feel that the value they deliver to the client is in monitoring their investments. Therefore there is a dis-connect between what advisers deliver and what clients actually want.

Headline finding 3:

By outsourcing investment management, firms can (if they follow a robust due diligence process) reduce risk and cost in their business.

Headline finding 4:

The industry should move away from its adherence to benchmarks. Clients should set the benchmarks to achieve the performance they desire.

Headline finding 5:

If a firm is using a number of DFMs / outsourcers, they need to remember that they are still responsible for suitability.

Any next steps?

It is one that is more for the advisers: how do you effectively manage the outsourcing of investment?