Some 34% of client portfolios are being outsourced to discretionary fund managers (DFMs), up from 28% in 2011, according to research released today.
The increase might surprise industry commentators who expected the Retail Distribution Review (RDR) would lead to greatly increased use of external DFMs.
The annual study from Investec Wealth & Investment which aims to track the changes in intermediary attitudes towards DFMs, stated that around half of IFAs (47%) now use DFMs and 82% use platforms.
A quarter (25%) of those IFAs surveyed said they outsource more than half of their clients' portfolios to a DFM for bespoke investment management, an increase from 22% last year. The average number of DFMs used by IFAs has also increased from two to three.
According to the research, the most important criteria cited by intermediaries when choosing a DFM are quality of service (92%), investment performance (91%) and personal relationship and trust (89%). The least important factors are compliance (50%), size of the DFM's AUM (50%) and the use of explicit non-compete clauses (62%).
With the onset of RDR, the research reveals one in five IFAs (20%) say they will increase the number of client portfolios outsourced due to RDR, with just 3.8% claiming they will reduce. However three-quarters of IFAs surveyed (76.1%) envisage no change.
Investec interviewed 249 intermediaries in November 2012.
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