The big story of this week has been Nucleus’ AIM listing – another platform IPO and a huge achievement for the whole Nucleus team.
In other news, we have just published our latest report, Model Portfolios on Platform, looking at outsourcing drivers and trends for adviser firms. When we asked advisers how they expect their firms’ outsourcing behaviour to change in the foreseeable future, they told us that they didn’t anticipate any major shifts.
This runs contrary to some industry commentators who view MiFID II as a catalyst for a step-change in outsourcing levels. Advisers have largely set their investment propositions and are comfortable with them.
Assets held in DFM model portfolios on platform remain on the up. But this is largely driven by flows from firms that are already outsourcing rather than new converts to the cause – the average adviser firm’s AUM in DFM models on platform has increased by 11% year-on-year.
DFMs say they find it challenging to recruit new adviser firms by dislodging entrenched relationships with their competitors. They might be better off targeting more recently established adviser firms looking to grow. The independent large nationals and networks can also offer attractive relationships with scope for higher flows.
DFMs’ days are far from numbered. There exist several growth opportunities: the unitisation of model portfolios could work for a few larger firms; more customised approaches could be appealing to some; we might even see DFMs look to crack the decumulation space and offer drawdown solutions that manage safe withdrawal rates, income and risk with greater rigour.