AIFA has launched a guide to help member firms make a "more informed" decision on outsourcing the investment function.
Supported by 7IM, the factsheet provides an overview of the decision-making process and the key questions to consider when it comes to choosing whether to keep investment management in-house or to outsource it.
It also highlights the importance of due diligence when choosing an investment manager and the FSA and TCF requirements when outsourcing.
Robert Sinclair, director of AIFA, says RDR is putting more pressure on advisers to review their business models and consider outsourcing.
He adds: "By outsourcing some or all of the investment management function, this can allow advisers and firms to dedicate more time to their core competencies, such as client management and financial planning.
"For these firms that are looking to maintain their independent status and develop a regular fee-based model, outsourcing this aspect of their regulatory responsibility can reduce their regulatory risk."
AIFA cites research from NMG, carried out among members in August, showing 51% of advisers cite lack of expertise and time as main reason for outsourcing management.
Tom Sheridan, chief executive of 7IM, says: "Many financial planners and wealth managers that do make portfolio decisions don't actually get paid more for their trouble, even though the time and resource required are quite considerable, and the investment and regulatory risks are high.
"Outsourcing investments allows the financial planner to sit ‘on the same side of the table' as their client, ensuring the investment manager is doing the job."
More details about the factsheet can be found here
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