- The regulatory issues in the form of ensuring client portfolios and adjustments to them are in the best interests of the client, for example it is no good just rebalancing a set of funds if for example the rebalance results in an event that could not be in the clients interests such as a capital gains tax event, and that it perhaps need to be clear and agreed with the client when portfolios will be rebalanced, by who, when and to what service levels
- Consumer pressures, often in the form of investors throwing spanners in the works of instructing their adviser to not sell a specific fund, or not buy one from fund manager XXX because they don’t like them. The impact of these real instructions on the systemised operating model is now starting to be fully understood. In short it makes what started being a simple solution and problem to solve to one that gets rather difficult and complicated
- Competitive pressures, where 2 things start to happen, firstly that as consumers see the same model portfolio trend across an industry, differentiation becomes less and price pressure start to form placing operational efficiency pressures on providers of model portfolios, but also that consumer direct platforms start to offer model portfolios also directly at very low costs (look at nutmeg, marketriders etc). Naturally as consumers and their advisers start to examine overall fees more closely, model portfolios of lower cost passive funds such as ETFs and securities start to emerge to displace the value that active asset managers may have filled in the past.
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