Five leading UK discretionary fund managers (DFMs) have joined forces to create the DFM Alliance, a platform that aims to educate advisers on the benefits of outsourcing investment management.
The founder members of DFM Alliance - as the partnership is known - are Brewin Dolphin, Brooks Macdonald, Investec Wealth & Investment, Quilter Cheviot and Rathbones.
As the UK DFM market continues to grow, the firms, which have combined assets under management of more than £130bn - said there remains a need for greater clarity among advisers around the concept of outsourcing, its potential benefits to both the adviser and the end client, and what constitutes best practice.
It will focus on educating advisers on the benefits of outsourcing investment management; providing a knowledge base for advisers to draw upon when undertaking DFM due diligence; working collaboratively with advisers to assist in improving business practices for the benefit of the end client; and explaining what working with a DFM could mean for advisory businesses.
Lucie Gordon, senior business development manager at Brewin Dolphin, said: "The burdens on IFAs are huge. We want to help IFAs carry these burdens through helping with their investment, regulatory and risk processes.
"Of course, outsourcing to a DFM may not be the right solution for everyone, but the formation of the DFM Alliance is testament to our commitment to making sure IFAs have the information they need to make this decision."
Mark Stevens, head of intermediary services at Investec Wealth & Investment said: "The formation of the DFM Alliance will help address the changing role of the adviser in recent years. Clients are looking for broader, holistic advice and are more amenable to the adviser outsourcing in order to gain access to a greater level of investment expertise.
"Managing investments is a full-time job, particularly at a time when it is harder to make good returns with appropriate levels of risk."
Andrew Denham-Davis, director, business development at Brooks Macdonald, said: "Ten years ago the term DFM was virtually unknown. At this important stage in the growth of the DFM industry we propose to focus our combined experience and resources to address the myths of the industry and emphasise that DFMs complement the adviser's role.
"Gaining recognition that working with us can improve the efficiency of the adviser business and customer outcome is absolutely crucial."
David Miller, investment director at Quilter Cheviot said: "The DFM Alliance aims both to remove any perceived doubt or mistrust advisers may have that using a DFM may weaken their client relationships, and to give IFAs who wish to use a DFM the right tools to compare. We are all different and it's important IFAs have a choice."
James Goward, head of sales support at Rathbones, added: "There are many advisers who understand the benefits of working with a DFM, but others are reticent because of what they think it may mean for their client relationships or their businesses.
"DFMs are sometimes perceived as expensive, less than transparent and even predatory. It is therefore our aim to educate advisers about how outsourcing can add value and strengthen the outcome for the end client. Conversely, this remains a fluid space, and DFMs have just as much to learn about the changing needs of the advisory world."
The chairman isn’t answering his email
Reforms not enough
An economic cocktail
To encourage consumers to shop around
Will report to Pat Shea