While the popularity of outsourcing has increased in recent years, many advisers still firmly believe investment calls should be kept in-house…
With the advent of the Retail Distribution Review (RDR) only 120-odd days away, many advisers are continuing to review their business model.
Faced with ongoing market volatility and macro uncertainty, some are questioning if they have the time and expertise to make investment decisions on behalf of their clients.
Elsewhere however, a proliferation in research tools and the rise of passive investment strategies has seen others choosing to keep the investment function in-house.
Not a done deal...
So who is right? PA spoke to a number of small firms to see what they are doing…
Meet the outsourcers
Matthew Rich, an IFA at Alan Seward Financial Services, said the small size of his firm had led him to use risk-rated portfolios.
“We are a small firm so we have taken the decision that there are experts out there better built to study markets and make active decisions,” he said. “Our job is better spent talking to our clients about their goals and attitudes to risk.”
He added that, by outsourcing, he could be “completely independent” because, should the investment solution underperform, he could switch it easily.
Philip Stevenson, chartered financial planner at ARK Financial Planning, believes it makes better cost sense to outsource. As one of only two advisers in the firm, Stevenson said he chooses to invest in risk-rated portfolios as picking individual funds, which he did several years ago, was “hugely time intensive and costly”.
“I always reckon I can do a half decent job of picking funds,” he said. “But when you’re invested in a fund and you want to get out of it because it is not performing, well, there is a huge amount of work and massive costs to the business, and I just thought there had to be a better way.
This article continues…
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress