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‘DIY’ model portfolios on the increase –

This is a really topcial article in much of my work at the moment and highlights the further industry supply chain ‘pirating’ going on: Players in the supply chain (in this case, advisors) are doing more and more to maintain relevance and margin in their businesses.

Are we entering an era in which there is going to be a desperate competition for securing the relationship with the client?  Will  platforms / advisers / DFMs / asset managers all compete to offer the same services?

My bet is that we are on the cusp of profound industry restructuring and, ‘yes’, there will be competition for the client relationship.  But, it will be just that the titles that change and perhaps a redefinition of retailers vs wholesalers.

‘DIY’ model portfolios on the increase


Advisers opting to use ‘DIY’ discretionary management rather than handing business to discretionary and fund of funds managers.


By Bradley Gerrard and Jenna Voigt | Published Jul 30, 2012 | 0 comments

Advisers are increasingly doing away with the need to outsource their investment management activities to a fund of funds or discretionary manager, by launching their own ‘DIY’ model portfolios.

The latest data shows advisers are flocking to opening DIY portfolios as a way of grouping clients into easily managed, fee-based structures. This enables them to continue to run investments even as the RDR comes into force next year and bans them from receiving commission payments.

Platform giant Fidelity FundsNetwork said more than 280 adviser firms have started using the firm’s new adviser-managed model portfolio service since it launched in October.

Model portfolios are effectively lists that dictate ideal investment portfolios for groups of clients with particular requirements based on their appetite for risk. Many platforms now enable automatic rebalancing of clients’ assets to reflect the changing model portfolios.

Paul Richards, head of sales at FundsNetwork, said there had been a “steady increase in demand” for the DIY portfolio service, adding that many adviser firms were now using it as a “core part of their investment proposition”.
Kim Barrett, senior partner at Barretts Financial Solutions, is running DIY portfolios hosted on the Transact platform.

He said advisers who are outsourcing investments to third parties could risk losing grip of their clients.

“If you are outsourcing then the client will eventually ask themselves why they need you,” Mr Barrett said. “It is such an obvious question but one which will smack advisers around the head if they are not careful.”

Stephen Piper, chief executive of Surrey-based Homecroft Wealth, has also opted for DIY portfolios – he said they gave his clients “more value” than they could get with a discretionary or fund of funds manager.


He added that many advisers were naturally concerned that they could fall foul of the FSA’s enhanced RDR requirements if they continue to try to advise on investments in any way – but these fears are overplayed.

Nick Bamford, chartered financial planner at Informed Choice, said DIY model portfolios enable advisers to retain value in their businesses – they can “give confidence, educate and reassure” clients about the investment process.

Mike Morrow, sales and marketing director at Ascentric, said half of the month-on-month flows go to model portfolios, with half of that going to adviser-contructed models, but he had not seen a recent significant surge.

“But models generally are continuing to grow as the choice of investment proposition as people look to tidy up their investment proposition before RDR,” he said.


Stuart Holdsworth

Author Stuart Holdsworth

Stuart has over 30 years of experience in the use of technology for the strategic competitive advantage of businesses in the financial markets and investment industry.

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