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ifa outsourcing increases but defaqto warns

The number of UK-based advisers outsourcing some or all of their client investment proposition has increased by just 3% over the past three years, although this still represents a high number of advisers.

ifa outsourcing increases but defaqto warns


The research from independent financial research firm Defaqto found the number of advisers currently outsourcing some or all of their investment has increased to 45% since 2011.

However, Defaqto warns, due to the increased number of outsourcing options now on offer, the landscape has become more complex.

“There are many options and it can quickly become very complicated,” said Fraser Donaldson, insight analyst – wealth management at Defaqto.

“Essentially, there are two core outsourcing solution types: managed funds or segregated portfolios. Under funds there are several subsets, but the ‘managed’ solutions tend to be multi-asset and/or multi-manager (whether ‘fund of funds’ structure or single manager).

“Segregated portfolios tend to be run by discretionary managers and investment houses either directly or indirectly. There are of course subsets within this high level taxonomy, and it is important to understand the subtleties and differentiators. Terminology itself is adding to the jungle of available outsourcing options.

Defaqto added that this raises five core challenges for advisory businesses:

  • Understanding the investment outsourcing landscape as a whole and, importantly, the variations within the core themes
  • Understanding the detail of the many options available, to be able to assess how they might support their client advice proposition
  • Conducting a robust due diligence process to ensure they select an appropriate solution and partner(s)
  • Successfully integrating that partner or partners into their processes and proposition
  • Operating a compliant and robust client investment proposition 

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