Almost two thirds of advisers feel that regulatory change and pressure has led to an increase in outsourcing their investment portfolio management, with the majority expecting to increase their use of managed fund solutions and model portfolios as a result, a Fidelity and FundsNetwork TM survey reveals.
The survey, conducted at a recent series of roadshows, identified that the majority of advisers currently use a blend of bespoke and model portfolios alongside managed fund solutions, with just under a quarter of respondents stating that they outsourced to discretionary fund managers. Following the advent of the RDR, advisers revealed that they are looking to increase their use of model portfolios (51%) and managed fund solutions (47%). Only 14% are looking to outsource more to DFMs. On the other hand, bespoke portfolios look set to take the biggest hit, with over a third of advisers (37%) indicating that they would use these less in the post-RDR environment.
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Of the advisers looking to increase their use of managed fund solutions, regulatory pressure was cited as the main driver with client segmentation and re-focussing of their business from investment selection to financial and tax planning, following closely behind.
Advisers were also asked how important it was to them for their platform to offer its own managed solution service. The majority (59 of those that responded considered it either as very important or important – indicating that advisers clearly value an on-platform managed solution service.
When choosing a managed solutions service, advisers indicated that they felt investment expertise and the resources of the managed fund provider is the most important factor. The cost effectiveness of the overall service, ranked second and a comprehensive fund range of funds and investment approaches, came in a close third.
Ben Waterhouse, head of UK retail sales at Fidelity Worldwide Investment, comments: "As advisers continue to enhance their fee based customer proposition, the demand for outsourced investment solutions gathers pace. Through partnering with FundsNetwork we can meet this demand through the Navigator business solution. Navigator provides the adviser exclusive access to a comprehensive range of multi-asset funds at a competitive total cost."
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By GlobalDataPaul Richards, head of sales at FundsNetwork, said: "The survey results show that advisers feel that they are under a significant amount of pressure to meet new regulations and, as a result, are looking to utilise services such as managed solutions and model portfolios. It is therefore crucial that both platforms and providers offer access to these types of solutions as they can help advisers build a robust, cost effective and future proof business model." The survey canvassed the opinions of over 200 advisers and was conducted at a recent series of roadshows which saw Fidelity and FundsNetwork join forces to help adviser’s future proof their business models.
