When it comes to discretionary fund managers (DFMs), discretion is not top of the agenda for Steve Perera, principal at Worcestershire-based Britannic Place Financial Management.
‘I’ve looked at DFMs on odd occasions but never felt comfortable with the charges they offer,’ he said. ‘I’ve never been convinced of the value they add to the relationship.’
It is hardly a surprise, then, that his firm’s standard service uses its own (solely bespoke) strategic asset allocation models. These are regularly reviewed for rebalances and any necessary fund changes. This involves significant administrative work for each client.
It may seem odd, therefore, that Britannic uses DFM Parmenion. But there is method in Perera’s DFM madness.
‘I currently use it for one specific reason: it has several models with passive underlying funds and passive strategic allocation, with portfolios rebalanced every six months,’ he said. ‘There’s no DFM charge for these purely passive models, only a 0.3% “custody charge”, which is effectively just a platform charge.’
This makes Parmenion ideal for Britannic’s ‘relatively small number of historic clients whose relatively small portfolios don’t generate our minimum fee requirement’, said Perera. ‘When I changed my advisory proposition, I wanted to continue providing a level of service to them, but with lighter administration.’
Most of the clients on this service have straightforward requirements, generally without the need for inheritance tax planning or cashflow forecasting. As such annual fees charged by Britannic for this service amount to £500 or less, with no portfolios larger than £70,000.
Parmenion is effectively its own platform. As such it is separate from the standard platforms used by Britannic.
The advice firm started using the DFM in mid-2012 and the main point of contact is relationship manager Mark Bonehill. ‘But I don’t speak with him very often,’ said Perera. Bonehill, I presume, does not take it personally.