Features

Our in-house consultants and data analysts produce regular, in-depth research features. Read the latest here:

 

Release of Diamonds and Stars Ratings for 2017. What's behind the stellar rating?

6 February 2017

Our ratings are current, unbiased and based on facts, not opinion, as they are provided by our independent experts who have unparalleled knowledge of the financial products and funds in the market place.  So how is this process able to provide both impartiality and trust to the industry?

Key considerations when choosing a DFM partner

6 February 2017

Defaqto has now launched its 2017 DFM Service Ratings. All the following figures come from this study, which we thought we would share with you. We leave you to draw your own conclusions on the findings, but hope a glimpse at what your peers are doing is of interest.

January 2017 adviser survey

6 February 2017

Defaqto has now launched its 2017 DFM Service Ratings. All the following figures come from this study, which we thought we would share with you. We leave you to draw your own conclusions on the findings, but hope a glimpse at what your peers are doing is of interest.

Benefits of risk rating Managed Portfolio Services

6 February 2017

Using risk ratings as a guide to what funds are suitable for the client is now a reasonably well established process, taking root in most adviser’s workflow some years ago. But, what about discretionary management?

2016 - Preparing for Change

6 February 2017

A review of the last 12 months and the significant changes to come!

A review of Defaqto's Autumn Events

30 November 2016

Frank Potaczek takes us through the highlights from the recent Defaqto events.

Asset allocation post-Brexit

30 November 2016

Earlier on in the year, we looked at asset allocation pre-Brexit with a specific focus on cash and property holdings in managed portfolios. Several months have passed and it’s time to revisit the data.

Interest in interest

30 November 2016

A consumer who holds who holds a savings account would expect to receive interest (albeit low), should a DFM client expect the same?

DFM and hidden charges

30 November 2016

Fraser Donaldson explores the discretionary world, where there is no real standard disclosure format for charges. Unless you know where to look and what questions to ask.

Home Bias

29 September 2016

The Brexit result at the end of June created some initial high volatility across many international markets and in the UK itself. Jason Baran discusses diversifying overseas in comparison to the UK.

MPS – Segmenting the market

29 September 2016

In a recent publication, Defaqto reported that both discretionary assets under management and the number of propositions available to advisers were on the rise. How does it look 6 months down the line?

New Model Portfolio Analysis in Engage

29 September 2016

Earlier this year, we began the process of risk rating model portfolios in the same way as we risk rate funds. We have now risk rated 119 portfolios, from 10 different DFMs, and this number continues to increase.

Investment specialisms

29 September 2016

When selecting an investment of any kind for a client there is a certain level of due diligence that needs to be undertaken to satisfy the regulators, but more importantly to maximise the probability of clients achieving their goals at a level of risk that they are comfortable with.

Decumulation in DFM

27 July 2016

Jason Baran discusses the change in decumulation since the pension freedoms regulation was announced 2 years ago and how new risks are being addressed by DFMs.

On the road again

27 July 2016

October sees Defaqto back on the road, with our popular Roadshow series. This time we'll be focusing on managing client investment portfolios, against an uncertain backdrop. Frank Potaczek discusses.

DFM on Platform- Asset allocation analysis

27 July 2016

David Boyle focuses on cash and property allocations pre-Brexit and the possible actions taken by investors to prepare for potential volatility.

Benchmarking in the DFM world

27 July 2016

In this article, Fraser Donaldson discusses various methods of benchmarking that can be used by an advisor and/or investment manager.

Value added services

27 July 2016

This article provides insight into the levels of service marketed to the retail investor and what to expect, based on the varied relationships with investment managers.

Model Portfolio Performance – a quick snapshot

25 May 2016

Advisers have access to over 800 model portfolio options from some 60 discretionary fund managers on the Defaqto Engage portal. David Boyle outlines some of the latest performance figures.

DFM on a platform – an accident of history?

23 May 2016

It's a sign of the times that there are more MPS solutions available through a platform than there are direct with the discretionary managers, but what are the differentiators between investing via a DFM compared to through a platform? 

Costs and charges disclosure

25 May 2016

In this article, Frank Potaczek explores the MiFID II implications on costs and charges disclosure.

Cost vs. value for money – update

24 May 2016

This article provides an update to a publication that Defaqto released last year on how advisers consider cost and value when making recommendations to their clients.

A strong DFM Market

25 March 2016

In this stats piece, David Boyle looks at the evolution of the Defaqto DFM database over the past three years and reports on the growth figures in discretionary assets under management. 

DFM Ratings

25 March 2016

There has been a lot of negative press about financial service product and service ratings of late. This month, Fraser Donaldson aims to give you further detail on how we go about our DFM ratings and the yearly cycle we go through before release in February of each year.

Discretionary Management and CGT

25 March 2016

Fraser Donaldson looks at the arguments for and against CGT management as a driver for DFM selection

 

DFM and good communications

25 March 2016

Most financial advisers will tell you that the foundation of a successful client relationship is good communication. At the heart of that good communication will be a good personal relationship. This article looks at what's needed from both the discretionary firms and the adviser community to enable a long-term mutually prosperous and effective 'partnership'. 

Risk targeted as an investment style in DFMs

3 June 2015

Patrick Norwood – Insight Analyst (Funds)

Risk targeted funds will explicitly target risk in their objectives, with these targets increasing across the family. This article explains more about these funds and how they can be used.

 

Sharia-compliant discretionary solutions

2 June 2015

Fraser Donaldson – Insight Analyst (Investments)

Of the 80 or so discretionary firms that Defaqto covers, there are only two that currently offer Sharia-compliant solutions – perhaps a little surprising with a quarter of the world’s population being Muslims.

 

The cost of MPS

1 June 2015

David Boyle – Funds and DFM Researcher

Managed portfolio solutions give clients access to discretionary management services at a price point and investment level that reflects the lower levels of service you’d expect to receive when investing in ‘off-the-shelf’ risk-aligned models as opposed to a bespoke investment solution.

 

Trends for the next 12 months

5 March 2015

Mike Turner – Assistant Research Manager for Funds and DFM

In this article, Mike Turner looks at a selection of major trends we've been observing, including the increasing use of risk targeted portfolios. In July 2012 the regulator published a final guidance paper stating expectations for advisers in regard to considerations when assessing the suitability of a centralised investment proposition (CIP), including DFMs.

 

What is a DFM – 12 months on

4 March 2015

Fraser Donaldson – Insight Analyst (Investments)

There is no doubt that the DFM market has been evolving since we last wrote an article on this topic, with many firms building and developing their propositions with the retail adviser market in mind. Add in to this the search for efficiency and cost savings, then we are beginning to see some subtle changes in the market. Any adviser undertaking due diligence needs to be aware of these subtleties and take them into account when considering solutions for a client.

 

Cost versus value for money

3 March 2015

Fraser Donaldson – Insight Analyst (Investments)

A high-profile industry figure once told me ‘no one will ever get fined for being expensive’. Quite a sweeping statement, but what he meant by that was that the cost of a service was not relevant unless you begin to apportion value to the individual elements of that service. So, what advisers should be looking at is value for money rather than cost. This is undoubtedly a difficult concept to quantify and as such equally difficult to record in terms of justification to the client.

 

Specialisms in discretionary fund management

2 March 2015

Fraser Donaldson – Insight Analyst (Investments)

The job of the DFM is to manage money to a mandate. This may be a mandate set by the client or adviser (bespoke) or a mandate set by the DFM firm itself (managed portfolio service). There are some circumstances that require particular investment capabilities beyond good strategic and tactical asset allocation decision-making.

 

Helping you navigate the DFM universe with independent data

5 January 2015

Zahid Bilgrami - Chief Executive Officer

At Defaqto, our core aim is to help people make better financial decisions. Since becoming CEO over two years ago, I have made sure that Defaqto continues to build on our successes, based on the knowledge that data is our life blood.

 

Spotlight on treasured assets and collectibles

23 December 2014

Fraser Donaldson - Insight Analyst (Investments)

Over the course of a lifetime, many investors will have accumulated a significant number of assets. Some will be mainstream packaged investment products; others will be more esoteric in their nature, explains Fraser Donaldson.

 

Considering a discretionary solution or not - that is the question

22 December 2014

Fraser Donaldson - Insight Analyst (Investments)

The service offered by a financial adviser needs to meet both the clients' requirements and the adviser business's needs. Each adviser needs to decide where to draw the line for the level of service offered for each type of client. In this article Fraser Donaldson summarises some important considerations.

 

Service and services - performance standards

15 December 2014

Mike Turner - Assistant Research Manager for Funds and DFM

For those that do adhere to a performance standard, this can be an indication of the extent to which DFMs are prepared to demonstrate transparency and integrity as the function of a standards agency should be to ensure complete and fair representation of investment performance, which can be compared on a like-for-like basis.

 

Discretionary and retail move closer together

17 October 2014

Fraser Donaldson - Insight Analyst (Investments)

Not many of you would probably expect the words ‘discretionary investment management’ and ‘packaged solution’ to be used in the same sentence, or even paragraph. After all, it hasn't been long since, with a few rare exceptions, the discretionary world would have little to do with the advised retail space, says Fraser Donaldson.

 

What can financial advisers expect to see in a portfolio?

10 October 2014

Jason Baran - Insight Analyst (Investments)

With their history of servicing the high-net-worth client segment, DFMs have gained broad knowledge of investments over the years. This, Jason Baran argues, makes them a viable outsourcing option for financial advisers.

 

Considering income streams during a client's retirement

9 October 2014

Jason Baran - Insight Analyst (Investments)

UK adviser clients will be free to use their pension fund assets as they see fit to fund their retirement, a step change from the previous requirement to purchase an annuity. Given these changes, the importance of portfolio construction during the decumulation phase is gaining more prominence, Jason Baran says in this article.

 

Discretionary management - service and services

31 July 2014

Fraser Donaldson - Insight Analyst - Wealth Management

One of the fundamental reasons for using discretionary management is to delegate investment decisions to a third party. Quite reasonably, there is going to be a cost to the client for this service. In this article, Fraser Donaldson looks at what else you get for your money.

 

Questions to ask a private client investment manager

31 July 2014

Frank Potaczek - Head of Insight and Consulting (Fund Management)

With summer well and truly upon us, market volumes historically are low. However, this means small events can have larger impacts on index levels. So, here are three questions you may want to ask a discretionary manager at a beauty parade this summer.

 

How important are personal relationships?

30 July 2014

Fraser Donaldson - Insight Analyst - Wealth Management

A great deal of effort and due diligence is quite rightly being expended on ensuring that contractual arrangements between adviser, discretionary firm and client are right for all parties. There is an argument though that suggests that the personal relationships between the parties are equally as important, Fraser Donaldson explains.

 

Small is beautiful? Bigger is better?

25 June 2014

Fraser Donaldson - Insight Analyst - Wealth Management

Beauty, as they say, is in the eye of the beholder. There are good reasons why adviser firms choose to partner with big or small discretionary firms. These decisions appear to be a function of resource, service and location, Fraser Donaldson says.

 

Financial strength

25 June 2014

Fraser Donaldson - Insight Analyst - Wealth Management

The fundamental reasons for choosing one discretionary manager over another are the philosophy of the discretionary managers and their success in terms of returns in carrying out that philosophy. The service received by the client and the adviser is also an important factor as it means that clients are happy and advisers can work efficiently, Fraser Donaldson argues in this article.

 

Entrants into the UK market

25 June 2014

Frank Potaczek - Head of Insight and Consulting (Fund Management)

There's been a plethora of change in the UK over the past three decades and with each disruption new opportunities have emerged for new entrants. Each of them brings us their vision of what good looks like. In this article, Frank Potaczek looks at the impact they may have.

 

Questions to ask a private client investment manager

30 May 2014

Frank Potaczek - Head of Insight and Consulting (Fund Management)

You’ve probably read the Defaqto guide on how to choose a discretionary manager and the investment outsourcing articles in the trade press. You may even have attended the Defaqto DFM Conference at the beginning of March and heard from the professionals themselves. In this article, Frank Potaczek gives you hands-on tips with regards to the questions you should be asking investment specialists in your meetings.

 

Accessibility

01 May 2014

Fraser Donaldson - Insight Analyst - Wealth Management

Since the emergence of platforms over a decade ago, bringing with it open architecture in terms of investment choice, the adviser industry has seen a shift of approach from being product selectors to investment solution advisers. Many advisers now believe that the investment behind the tax wrapper is the key determinant of client goals being achieved, rather than the tax wrapper variant itself.

 

Fund investment: active, passive or blend

30 April 2014

Patrick Norwood - Insight Analyst - Funds

Investments in a discretionary portfolio or fund can be either active or passive or a blend of the two. In this article, Patrick Norwood explains the differences.

 

Questions you should be asking investment specialists

1 April 2014

Frank Potaczek - Head of Insight and Consulting (Fund Management)

You’ve probably read the Defaqto guide on how to choose a discretionary manager and the investment outsourcing articles in the trade press. You may even have attended the Defaqto DFM Conference at the beginning of March and heard from the professionals themselves. In this article, Frank Potaczek gives you hands-on tips with regards to the questions you should be asking investment specialists in your meetings.

 

Discretionary management – an investment solution

01 April 2014

With only a handful of exceptions, discretionary management is a relatively new investment choice for the adviser distribution channel. The immediate perception of discretionary solutions is that they provide a superior service.

 

Remaining in control – a question of relationships

01 April 2014

The FSA's Final Guidance: Assessing suitability: Replacement business and centralised investment propositions paper issued in July 2012 clearly defined what contractual relationships were acceptable between the adviser, discretionary manager and client.

 

Implications of a merger or acquisition in the DFM market

27 February 2014

Richard Hulbert - Wealth Analyst/Consultant

In recent years we have seen a number of mergers and acquisition (M&A) in the DFM arena. In a post-RDR world where due diligence is key these transactions should be triggering a fresh review by advisers of the ongoing suitability of all of their DFMs.

 

How SIPP providers select DFMs for their panels

27 February 2014

Richard Hulbert - Wealth Analyst/Consultant

In 2013 Defaqto surveyed SIPP providers and discovered some interesting points regarding how they select DFMs. The findings are based on the information provided by 39 different providers operating 51 different SIPPs.

 

MiFID II and the cost of outsourcing to a DFM

27 February 2014

Fraser Donaldson - Insight Analyst - Wealth Management

As analysts, we are delighted to see the headlines that have reported the passing of the revised Markets in Financial Instruments Directive (MiFID II) into law, which is making it compulsory for UK investment firms to disclose the total cost of their investments to their clients.

 

2013 review: The year the regulator got tough on due diligence and charges

28 January 2014

Richard Hulbert - Wealth Analyst/Consultant

2013 was never going to be a quiet year with RDR in the forefront of every adviser's mind and the Financial Conduct Authority (FCA) challenging the charging philosophies of fund managers, platform providers and SIPP providers. In this article Defaqto's Richard Hulbert is analysing some of the key events and trends and their impact on the adviser world.

 

What is in store for 2014?

28 January 2014

Fraser Donaldson - Insight Analyst - Wealth Management

The DFM Newsletter has over the past six months or so been reporting on what has happened in the DFM market, how it has evolved in a short space of time, how it has been viewed by the various links in the distribution chain and how it should fit into the advisers' armoury of investment solutions. Here is Fraser Donaldson's view on what may be in store for 2014.

 

Passive offerings from DFMs

28 January 2014

Richard Hulbert - Wealth Analyst/Consultant

DFMs have historically been the home of active managers seeking alpha for their clients, the go to experts for those wanting stock market exposure and the prospects of outperformance. This article explores what passive offerings from DFMs can do for advisers.

 

Understanding where Unitised Discretionary Managed Funds sit in the market is crucial to adviser decision-making

14 January 2014

Patrick Norwood - Insight Analyst - Funds

Unitised Discretionary Fund Managers - collective investment schemes run by discretionary managers - can offer numerous benefits to advisers and clients. However, the research and selection process can pose a challenge for advisers, making a thorough undertanding of product positioning and methodology crucial to the advisory process.

 

Bespoke inheritance tax (IHT) portfolios using business property relief (BPR)

20 December 2013

Richard Hulbert - Wealth Analyst/Consultant

When planning to mitigate IHT advisers tend to sometimes overlook discretionary fund managers (DFMs). This is an area that is made for specialist investment managers and one that would probably be top of the list for an adviser to outsource. It needs to be said though that expertise in unquoted and AIM stocks is a must in this arena.

 

Dynamics of managed portfolio services (MPS) on a platform

20 December 2013

Richard Hulbert - Wealth Analyst/Consultant

Over the past few years platforms have opened their doors to DFMs and at the time of writing 19 of them are offering some form of DFM relationship for advisers to utilise. There are obvious benefits for all parties. The platform becomes attractive to advisers interested in working with the DFM and the DFM becomes attractive to the advisers already using the platform. Ultimately, the client has greater access to the DFMs through a platform with readymade functionality with which to host the MPS.

 

Tailored managed portfolio services (MPS) for advisers

20 December 2013

Richard Hulbert - Wealth Analyst/Consultant

Tailored MPS is an emerging solution and possible alternative to a formulaic MPS for advisers looking to stand out from the crowd by offering a unique, professional and personal solution to their clients. In essence, a tailored solution is taking the very individual needs of a client or client bank, adding in the adviser influence over risk, volatility and asset allocation and then employing a DFM to manage the assets to the specific criteria and objectives, often on a platform. They are commonly used by advisers who feel their clients' needs cannot be met by off-the-shelf products and/or for those who have an economic viewpoint currently not being catered for by other solutions.

 

Ethical investing in the post-RDR environment

04 December 2013

Fraser Donaldson - Insight Analyst - Wealth Management

The use of discretionary management (whether bespoke or managed) is becoming increasingly popular with financial advisers. The catalyst for this popularity has been the Retail Distribution Review (RDR) and the decision by many advisers to build a Centralised Investment Proposition (CIP) in order to achieve consistency of investment advice. This article will explore how this affects ethical investing.

 

DFM due diligence, selection and suitability

4 December 2013

Richard Hulbert - Wealth Analyst/Consultant

When you recommend a DFM to your client and have an ongoing relationship with that client then it is widely accepted that you are responsible for ensuring the ongoing suitability of that DFM and the services they provide to your client.

 

DFMs for specific segments/mandates

4 December 2013

Richard Hulbert - Wealth Analyst/Consultant

The Retail Distribution Review (RDR) and the rise of platforms have brought DFMs into vogue with financial advisers who are looking to mitigate some of their own risks while offering their clients something extra and the DFMs have not been slow understandably in opening their doors. Clearly, DFM solutions are appropriate for many clients but certainly not all.

 

Discretionary fund management and platforms - a discussion on market dynamics

31 October 2013

Fraser Donaldson - Insight Analyst - Wealth Management

Platforms usually offer access to funds and direct securities. For most of the nearly 15 years that adviser platforms have been around in the UK, they did not host discretionary services.

 

Managed portfolios competing in a multi-asset world: What does this mean for advisers?

31 October 2013

Fraser Donaldson - Insight Analyst - Wealth Management

There is no doubt that the success of the multi-manager fund industry over the past 10 years or so has encouraged discretionary managers to look again at the adviser distribution channel. The consequence of this is that advisers and their clients now have an alternative to multi-manager that is now widely available.

 

Should unitised discretionary fund managers have their own IMA sector or at least be segmented from the other sectors in which they are represented?

31 October 2013

David Cartwright - Head of Insight and Consulting (Wealth and Protection)

The real question here is probably more aligned with considering whether unitised discretionary fund managers (DFMs) should only be compared to their own specific peer group or whether - as many have suggested - they should also be compared and assessed in the broader risk targeted fund universe on the basis that they are fund structures and as such trade the same as any other fund.

 

Performance - a tricky business

30 September 2013

Fraser Donaldson - Insight Analyst - Wealth Management

A good part of an adviser’s investment due diligence is ensuring that the risk taken by portfolio managers is compatible with the risk that the client is prepared to take. This means selecting a portfolio that is risk targeted, that is remaining within a certain risk band, usually measured by volatility, or a return focussed fund that is driven by beating a benchmark with appropriate disciplines built in. This article looks at performance analysis, benchmarking and monitoring.

 

The cost of underlying collectives

30 September 2013

Fraser Donaldson - Insight Analyst - Wealth Management

One of the most significant contributors to the overall cost of discretionary management, particularly MPS solutions, is the cost of any underlying collectives as this is always in addition to the headline annual management fees. This article details what you need to know about the cost of discretionary management during the transition from pre-RDR to the new way of charging post-RDR.

 

The dynamics of the charging structures available to financial advisers

30 September 2013

Fraser Donaldson - Insight Analyst - Wealth Management

Cost contributes to any purchasing decision and an adviser recommending discretionary management to a client is no different. It is the adviser’s role and duty to ensure that their clients receive products and services at a fair price. This means advisers are more interested in the client receiving value for money rather than just the lowest price.

 

Unitised DFMs - what are they and where do they sit within the DFM universe?

1 August 2013

Patrick Norwood - Insight Analyst - Funds

The whole area of outsourced investment solutions is becoming complex, with different fund groups providing a variety of solutions that may ultimately produce different outcomes for investors.

 

Not all MPS solutions are the same - how do you differentiate between them and achieve client suitability?

1 August 2013

Fraser Donaldson - Insight Analyst - Wealth Management

As advisers continue to re-engineer their businesses in the pre and post RDR world, we have seen a growing trend towards outsourcing investment management.

 

Measuring the performance of a discretionary manager effectively

Fraser Donaldson - Insight Analyst - Wealth Management

Measuring the performance and obtaining accurate information for any discretionary fund manager (DFM) can be difficult.

 

MPS and DFMs could be the perfect solution for advisers and their clients

17 April 2013

Fraser Donaldson - Insight Analyst - Wealth Management

With RDR implementation now just months away, advisers are continuing to review their business propositions. Part of this review will inevitably include decisions around how the clients' investment portfolios are run. For many IFAs, outsourcing their investment process will be a natural conclusion.

 

Multi-managers will play a big role post-RDR, but due diligence remains essential

17 April 2013

Multi-manager funds have accrued significant assets under management over the last 10 years and this is likely to continue beyond RDR implementation. Although new challengers to multi-manager have emerged, the rationale for using these funds has not changed and many of the attributes that advisers need to assess and understand remain.

 

Managed Portfolio Serviced can bring benefits of discretionary management to more clients

17 April 2013

Fraser Donaldson - Insight Analyst - Wealth Management

Investing in multi-manager funds has been the outsourcing solution of choice for several years now. However, our research has indicated that employment of a discretionary manager is being seen as a real alternative, with our most recent research indicating that more than a quarter of IFAs that are outsourcing use a discretionary manager in some capacity.

 

Multi-manager funds may be the answer for clients seeking greater diversification

17 April 2013

41% of investors choose to use an adviser when investing in a fund, while 20% select the investment funds they want to invest in collaboratively with their adviser, according to Legal & General.

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