Advisers continue place more of their business with discretionary investment solutions. This trend has followed the gradual decline in individual advisers selecting funds for their clients – especially single-strategy funds, according to our latest research UK Financial Advisers: Investment Propositions.

The key drivers shaping advisers’ investment propositions are:

  • Consolidation of the advice market continues to accelerate, contributing to the shift of clients’ portfolios from advisory business to discretionary management. Consolidators gradually move the clients’ portfolios of their acquired firms into their CIPs, which are typically their own ranges of in-house discretionary investment solutions.
  • Regulation is also influencing adviser behaviour, with advice firms adapting their businesses to varying degrees ahead of Consumer Duty. Many advice firms we spoke to are opting to move their clients’ portfolios from their in-house advisory portfolios to discretionary MPSs for compliance ease.
  • Erratic markets have also played a part in some advisers’ decisions to outsource their investment propositions to DFMs. Clients tend to be more concerned about investment losses than investment charges. Advisers running in-house solutions carry more of the risk of being blamed for poor performance in volatile markets.
In some ways it is surprising that the old habits of individual advisers running money for clients are taking so long to die out. This shift is happening much faster among larger firms, where the business model tilts more to vertical integration of one sort or another.
Plenty of advisers continue to regard investing as central to the value they provide clients, but they are increasingly prioritising tax and financial planning rather than directly running money themselves to provide value and justify advice fees.
Platforum has recently published European Fund Distribution: Platforms examining the latest trends in the European B2B, B2B2C and B2C markets. Please get in touch for more information.