View the article online at http://citywire.co.uk/new-model-adviser/article/a661707
Ascentric: limited risk tools drive advisers to DFMs
by Michelle Abrego on Feb 26, 2013 at 15:34
Limitations in the risk and asset allocation tools used by advisers are driving them to outsource investment to discretionary fund managers (DFMs) in order to be compliant, according to Ascentric.
Speaking at the Defaqto DFM conference, Ascentric chief executive Hugo Thorman said that advisers are limited in their ability to service their client, both by the tools they use and the permissions they have.
He said ‘it was very difficult for advisers too move away from their tools’ when recommending rebalancing portfolios without a discretionary fund manager.
He gave an example: ‘Most advisers agree that bonds at the moment, whether sovereign or corporate, are priced high, and because of government moves it’s highly likely that the next movement will be down.’
‘But your risk tool will tell you that you need to have a chunky amount of a client's portfolio in bonds. The only person that could really take a different view is a DFM.
‘I would say that its very difficult for an adviser to take a brave view like that. Some of you will and it will be well documented but it always be a brave step and veer away from that [tool].’
After an adviser has set an asset allocation, the adviser cannot move the asset allocation until the client agrees and at times clients do not respond quickly enough, leaving the portfolio unbalanced, he said.
Governance was also stressed by Thorman: ‘It is everything that I’m absolutely sure that the regulator will be looking at in the third part of this year when they look to see how the retail distribution review is progressing.’
‘I do urge you to consider that everywhere you can.’
News sponsored by:
Today's top headlines
- Sunday Papers: BoE to launch inquiry over forex fixing claims
- Saturday Papers: Independent Scotland would lose UK's AAA rating, warns Citigroup
- FCA issues warning against US firm targeting UK investors
- Nest director John Taylor exits after 12 months
- FCA set to simplify adviser charging reporting rules
More about this article:
More from us
- Ascentric sees new business fall 7% in 2012 despite late surge
- #adviserweek: IFAs question platform and DFM costs
- Ascentric: platform Sipps will be free as competition heats up
- Lawyer warns IFAs over 'light touch' FCA
by Himanshu Singh on Mar 09, 2014 at 04:54