Once the honeymoon period is over what next? Financial Advisers can spend significant time undertaking due diligence and selecting an investment partner so what should the ongoing relationship look like to ensure that it doesn't become a divorce statistic?
Whilst performance at a competitive cost can never be underestimated, ensuring the delivery of an ongoing service is a key ingredient to success. This is particularly important when a financial adviser uses a model portfolio service on a platform. There is no direct relationship between the Discretionary Fund Manager (DFM) and the client so the provision of information to support client communication is key and there are some factors to consider:
Regular updates about the model portfolios including performance, rebalancing and changes to the underlying investments should be delivered to the financial adviser in a timely manner. Although the financial adviser has selected to pass on the investment management to a third party, responsibility and liability for that manager selection and monitoring how the assets are being managed still lies with the financial adviser. Regular delivery of factsheets and investment reports including market commentary and an outline of why investments are being selected or de-selected are important.
Delivery of information
The timing of delivery of information to the adviser is vital. Whilst monthly and quarterly updates are helpful, if an ‘ad hoc' change is made to a portfolio the adviser needs to be made aware as quickly as possible as they are wholly responsible for investment discussions with their clients. Delivery of this information in ‘client friendly' language also greatly assists financial advisers with client facing discussions. Equally, the ability for the adviser to send the client a quick update on their investments is something which DFMs should support.
In addition to issuing information, most DFMs offer a dedicated website containing not only portfolio information but how these are aligned to risk tools, availability on platforms and thought-leadership content - and in a range of formats e.g. downloadable documents, podcasts and video.
Like any partnership, this is a two way relationship and it's important that the financial adviser has access to the investment team. Advisers need to be assured that if they require information quickly about the portfolios or a discussion about one of the investments then this level of service is available.
In summary, there are some simple steps to maintaining an ongoing relationship and two-way communication is key!
Gillian Hepburn, Intermediary Solutions Director, Schroders
Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Schroders has expressed its own views and opinions which may change.
This information is not an offer, solicitation or recommendation to buy or sell any financial instrument or to adopt any investment strategy. Nothing in this material should be construed as advice or a recommendation to buy or sell. Reliance should not be placed on any views or information in the material when taking individual investment and/or strategic decisions. No responsibility can be accepted for error of fact or opinion. Issued by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU, registered No. 1893220, who is authorised and regulated by the Financial Conduct Authority.