Outsourcing to DFMs: 'Agent as client' or 'agent of client'?

For a growing number of advice firms, outsourcing investment to a discretionary fund manager (DFM) is a useful means of de-risking your business. According to our 2024 Overheating CIP report earlier this year, the number of firms outsourcing has increased from 38% two years ago to 55% now, overtaking those running their own model portfolios in-house. However, when you decide to outsource, you also need to consider how the agreement with the DFM is structured. There are two routes in these agreements: ‘agent as client' and ‘agent of client', and the little words ‘as' and ‘of' mask fund...