Adviser use of DFMs set to increase by 20% - Nucleus

A survey of 180 users of the adviser-built platform, which is set to launch its own discretionary portfolios, showed the trend towards investment outsourcing looks set to continue.

The census indicated a 20% increase in the use of model portfolios being run on a discretionary basis was expected over the next 12 months.

Nucleus chief customer officer Barry Neilson said this reflected that advisers wanted to focus more on financial planning than investment.

"It is clear advisers want more time to further deepen the financial planning journey with their clients, which is leading more to outsource their investment decision-making processes, or to plan to do so in future," he said.

"With the cost pressures and capacity challenges facing advisers today, the increasing range of outsourced investment solutions that are available today can be a useful way for advisers to free up time to focus on financial planning."

'Poacher turned gamekeeper' - Nucleus to launch its own discretionary portfolios

A further 30% of advisers said they would not consider building their own model portfolios. For those firms that choose to outsource, cost was the most important factor when selecting DFM model portfolios for 86% of respondents.

When asked about fund management costs, nearly half (47%) expected clients to pay between 0.25% and 0.5% for investment solutions, while under a third (29%) indicated costs of between 0.5% and 0.75%.

The second most important driver behind DFM selection was investment process, with nearly three-quarter (72%) of respondents citing it as a deciding factor.

Environmental Social and Governance (ESG) investing was also a significant feature, with nearly half (46%) of advisers believing ESG considerations should be a part of an investment solution.

Meanwhile just 8% of users adopt factor-based investing as part of their approach, though there are signs more will look to use factor-based investing in future.

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