Nearly two-thirds (62%) of adviser firms now have investment committees; and these play an increasingly important role in selecting investments, according to our latest research into adviser investment propositions. Many smaller firms have these committees, and among larger firms with at least £1 bn AUA they are universal. That represents a big increase from just five years ago when fewer than 37% of firms had them.

Most adviser firms still keep at least some of their fund selection within their businesses, but the growing importance of investment committees is felt across those that outsource investment management as well. When they aren’t looking at fund buy-lists, investment committees are typically monitoring and making decisions about their firms’ other external suppliers of investment services.

Many investment committees include experts from research agencies, DFMs and other specialists. These outside specialists can bring a level of expertise that the firm might otherwise lack. In many businesses the outsiders bring the value of a different and challenging perspective. As one paraplanner put it, investment committees facilitate a meeting of minds of people “with different hats on.”

Asset managers, platforms and DFMs who ignore their importance and influence will miss out badly: they are key to the development of advisers’ investment strategies and also to the selection of product providers, DFMs and funds. Their influence is growing and they’re worth keeping an eye on.

The composition and influence of investment committees is just one area covered in Platforum’s UK Financial Advisers: Investment Propositions report for 2020. For more information please contact Jean-Luc de Jonge or download the report outline here.