Engage provides an unparalleled DFM research tool

23 July 2019

An increasing number of financial advisers are appointing discretionary fund managers (DFMs) to run their clients’ investments. Utilising a DFM can bring efficiency and reduce operational risk for advisers. But advisers must be prepared to dedicate resource to choosing and monitoring managers in an increasingly crowded market.

With time efficiency high on a financial adviser’s priority list, it is important for the information on DFMs whether that’s Bespoke or Managed Portfolio Services (MPS), to be easily accessible, comparable and applicable.

Defaqto’s end to end financial planning tool, Engage can help financial advisers to make the most of their research and ensure that they are making better-informed decisions when selecting a DFM for their clients.

Three-way research

Through Engage, financial advisers can access Defaqto’s integrated fund/portfolio, product and platform research. This approach always provides an adviser with a route to market for their recommended solution, regardless of how the research process was started.

Engage works intuitively and seamlessly with how a financial adviser prefers to work. Specifically, when researching DFMs, Engage provides access to data that allows advisers to filter and sort on an array of service features including cost and performance. Defaqto’s own range of Service and Diamond Ratings help advisers identify suitable propositions and suitable underlying portfolios.

Engage is highly configurable, allowing an adviser to easily programme in their Central Investment Proposition (CIP) which brings consistency and efficiencies to the research process.

Data is updated on a regular basis so advisers can be safe in the knowledge that they’re working from the most up to date data.

Risk Profiling

Since the Retail Distribution Review there is an even greater focus on suitability: advising clients on the most appropriate way of achieving investment outcomes. To that end they determine a client’s natural risk profile and their capacity to accept losses.

Defaqto’s team of Chartered Financial Analysts (CFAs) have created a robust methodology to risk rate funds and DFM Managed Portfolios to Defaqto’s risk profiles. With over 900 Defaqto risk rated funds and portfolios (checked and updated quarterly), advisers can easily identify solutions that have been independently rated to their clients’ agreed risk profile

Defaqto has created ten Risk Profiles, which can be mapped to the client’s attitude to risk. The higher the risk profile, the greater the potential return but also the greater the investment risk.

Each Risk Profile includes a definition of a typical investor’s attitude to investing. For each Risk Profile, there is also an indication of the potential volatility in value over a 10-year investment term, to help guide decisions and for the client bring to life typical investment journeys bringing with it the opportunity to adjust their attitude to Risk.

Engage offers a completely holistic tool taking into account all of the areas a financial adviser and their clients may want to review. Every step within a workflow is automatically recorded, creating an audit trail. Users can choose the level of detail that goes to the final regulatory reports, including projection graphs, comparison tables (including MiFID II data, where available), KIIDs and fund fact sheets.

About Engage Core

You can learn more about Engage Core, our end-to-end financial planning tool, and request a  demonstration, here.

You might be also interested in our other Insight articles, covering a broad range of topics.

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