Where DFMs manage segregated portfolios on a model basis, the onus falls back on the adviser to advise on CGT – since the DFM will manage all model portfolios for all clients in the same way, including periodic rebalancing. This may well be fine for many clients, but unlikely to be right for all clients all of the time (advisers need to avoid shoehorning).
So how will the battle lines be drawn? The multi-managers have some impressive weaponry. This includes big marketing budgets, brands well known to the market, lots of roadshows, easy to buy funds and they behave like product providers of old, which is comforting for some advisers.
However, the DFMs often have more subtle tactics to bring to the field. They offer a wider variety of investment options for advisers and clients, a service culture, they are personal and accessible, and are increasingly accessible via wraps and platforms.
But who wins – DFMs or multi-managers? The answer perhaps lies in whether the financial advice community continues to move towards delivering a professional service, rather than following the older model of selling investments.
Lawrence Cook is director of business development at Thesis Asset Management
Research results
• Average proportion of assets held in multi-managers is 27.5 per cent
• Average proportion of assets held in DFMs (not in an OEIC wrapper) is 17.5 per cent
• Regular users of DFMs tended to use them either as a core proposition or for high net worth clients
• Schroders was the most common first choice of multi-manager provider, followed by Vanguard and 7IM
Source: CWC Research / The Lang Cat research report Never Mind the Quality, Feel the Width, based on 45 responses.
