Is your adviser in control of investment recommendations?
New research from independent financial research company Defaqto has found that 19% of IFAs choose to outsource their investment process to a discretionary fund manager.
This means that they focus their attention on Financial Planning and advice, before handing over the investment decisions to a third-party.
There is nothing wrong with this approach. In fact, it makes real sense where an adviser has recognised their own weakness in the provision of investment advice to clients.
To delegate this important responsibility to a suitably qualified and experienced investment manager prevents the less desirable situation of an IFA trying to make investment recommendations without the necessary skills.
Here at Informed Choice, we faced a choice a few years ago about whether to outsource our investment recommendations to a discretionary fund manager, buy in research from another firm or build the capability to deliver quality investment advice in-house. We decided to go with the latter.
As a result, we constructed a robust investment advice process, developed a transparent investment philosophy and set up an in-house Investment Committee to make important decisions about our House View for different investment types.
More recently, we appointed an Investment Director with a background in institutional fund management.
We have now been running a series of model investment portfolios for over a year and all have performed strongly, as expected, against the strategic benchmarks we set at outset.
This chosen approach to the delivery of investment advice means that we have been able to manage costs, avoid unnecessary risks, retain control over the areas of investment and manage expectations with our clients.
After attracting interest from a number of other IFA firms who wanted to do something similar but did not have the resources or expertise, we have now packaged our research and made it available to other professional advisers. There is more information on this service, which we call Investment Advantage, at this link.