IFAs losing control of client assets through DFM services

Managed portfolio and discretionary fund management (DFM) services are taking away the control that IFAs have over client assets, Assetfirst has warned.

With IFAs increasingly looking to outsource portfolio services, Assetfirst has stated that the control IFAs have over client assets will dwindle and control will pass onto the discretionary manager’s platform, which in turn can cause a number of problems.

Assetfirst partner Philip Bailey said: “When IFAs sign up to these outsourcing services they often don’t realise they are opening themselves up to two fundamental issues affecting control of their clients’ assets and their own value proposition.

“Should the manager not be performing as the IFA would like and so has to be changed, the IFA has first to conduct another beauty parade and then move all assets away from the initial manager on to the new manager’s platform. Not only can this cause capital gains tax issues where assets have to be sold but the change of manager has to be explained to all IFA clients. This can give clients a negative impression of the IFA's service.”

Bailey also stated that outsourcing an investment strategy to a third party can result in the value of the IFAs proposition being severely reduced. In addition, he highlighted the importance of IFAs retaining the control of assets and ensuring that they remain fully involved in client engagement and communication.

“As the IFA is in complete control they have the discretion to tweak the portfolio to include favourite funds or ETFs as they wish,” Bailey added.

    Share Story:

Recent Stories


Making it easier for smaller schemes to access bulk annuity pricing
Pensions Age editor, Laura Blows, speaks to Just DB business development manager, Pete Jennings, about how smaller schemes can access the bulk annuity market
Green investing
Laura Blows speaks to FTSE Russell, Head of Sustainable Investment Solutions, Lee Clements, about green investing, green revenue data and the EU Taxonomy