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The big outsourcing opportunity: how to pitch to 25 top advisers

Every week for the last nine months Wealth Manager has interviewed New Model Advisers in the market for discretionary management – here we present a selection of them.

We have now entered the final stretch on the count down toward the retail distribution review.

Amid a number of looming liabilities for discretionary managers, the biggest plus has to be the following wind the regulation has put behind a major source of business – financial advisers.

Every week for the last nine months Wealth Manager has interviewed New Model Advisers in the market for discretionary management – here we present a selection of them.

Click through to find out What Advisers Want – and remember to check your copy of the magazine to see the latest updates.  

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As a financial consultant, Simon Wood-Woolley has built trusting, professional relationships, helping clients with their financial planning over the short, medium and long term. Before launching Define, he worked as an independent consultant for a financial management consultancy. 

Define Financial Planning is an independent financial advice consultancy offering a boutique service to a select number of clients. Many of our clients are business owners or company directors. We have advised them on corporate finance such as group pensions and income protection, as well as their personal investments.

What are the most important factors for you when selecting a discretionary fund manager (DFM)?

We’re open and always looking. But at the moment, the guys at Brewin Dolphin are doing a decent job. Brewin Dolphin’s scale and the resources it has at its disposal are important. Outsourcing is new to the firm and only taken on a case-by-case basis as opposed to en masse.

What will make or break a pitch?

It took us about two years from starting the process to feeling comfortable and running with it. The financial planning arm of Brewin Dolphin was very nearly the deal breaker but after assurances we were eventually comfortable.

What were the reasons for selecting your current providers?

The adviser/client/DFM relationship is strong and was the main driver in the decision to choose Brewin Dolphin. It was happy to agree to our requests. We wanted quarterly meetings with the investment manager to look at client portfolios and the firm agreed to that.

FACTCHECK

Total assets outsourced:

£1m

Average portfolio size:

£300k

Location:

Reigate, Surrey

Preferred platforms:

Ascentric and Skandia SIS    

DFMs currently used:

Brewin Dolphin

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship:4

Past performance: 3

Reporting: 3

Size of firm: 3

Strength of process: 5


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Paul Russell has been an IFA since 1988. The practice in which he was senior partner was sold to the financial planning arm of a firm of chartered accountants in 2003 and in 2007 he was asked to head Ashton KCJ Financial Planning.  

Ashton KCJ Financial Planning is an IFA whose main focus is offering bespoke financial planning services to clients of Ashton KCJ Solicitors. The firm’s aim is always to dovetail financial planning with any legal advice clients may be receiving or need. By working alongside colleagues at Ashton KCJ Solicitors, it offers comprehensive long-term solutions, ensuring all aspects of its clients’ financial affairs are arranged in line with their personal goals for the future.

What are the most important factors for you when selecting a discretionary manager?

Good past performance is a given, but we need to understand what lies behind that. We consider the nature and depth of their research and want to be able to understand their investment philosophy to ensure it fits with our approach. Cost is important but not the final arbiter; we do want the DFM to offer good value. 

They need to understand the nature of the work we do and our clients’ needs. Very often the DFM will be invited to attend client review meetings as the three-way relationship between client, financial planner and DFM needs to function effectively. 

What will make or break a pitch?

Failing to listen to our clients and their needs. It’s a basic skill yet vital for the ongoing working relationship, which is fundamentally one of trust. 

Why did you select your current provider?

7IM offers an effective and easy to use platform. Its range of risk rated portfolios will cover the needs of many clients. It has a sound investment philosophy allied with extensive and independent in-depth research. 

Quilter has run portfolios for us for some time and produce good results. Its approach is more ‘traditional’, which suits certain clients. We have found that it is very good at managing client relationships.

Hawksmoor is a small firm with particular expertise in closed-end funds, and is more local to some of our clients, which many find attractive. It is a useful feature to be able to offer bespoke management from a boutique firm. 

FACTCHECK

Total assets outsourced:

c£25m

Average portfolio size:

£250k

Preferred platforms:

7IM, SIPP Centre, Cofunds, Skandia   

DFMs currently used:

Hawksmoor, 7IM, Quilter

What do you value most in a DFM

On a scale of one to five where five is the greatest

Relationship - 4

Past performance - 3

Reporting - 4

Size of firm - 3

Strength of process - 4


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Nick Holdcroft is director of Horlock Holdcroft Financial Consultants, and has 18 years’ experience in financial services. He has won numerous awards for his Sipp planning expertise and services. 

Horlock Holdcroft Financial Consultants was established in 2009, and has grown steadily to a team of seven today. We have developed our model with the retail distribution review in mind, and seek to build long-term client relationships, with a continuous high level of service. Our advisers have varying specialisms, and we often collaborate or share clients to ensure they receive the most relevant expertise. These core principles enable clients to receive advice that is consistent and in an environment they find professional and approachable.

What are the most important factors for you when selecting a discretionary fund manager (DFM)?

The relationship that we have with the DFM is very important.  We see DFMs as a working partnership rather than an outsourced service, and need to be sure the management team will spend time with us and our clients in order to understand and adapt their approach as client situations change. We also need to see evidence of strategic decision-making, and portfolio activity that reflects these decisions. We require a DFM to consider a wide range of assets and investments, and will make meaningful changes to the allocation, including bolstering cash holdings in troubled times, rather than be tied to a benchmark.

What are the least important factors?

A manager that can speak confidently about wider economic drivers, their house views and their expected action/reaction is important. Also, a professional and trustworthy approach that centres on building a portfolio around the clients requirements is paramount. We would not be happy with a rigidly benchmarked portfolio of collectives, as there are enough ‘governed, risk-rated’ type funds that can provide this at far lower cost.

What will make or break a pitch?

We have been working with the same team at Rathbones for many years, and find they intuitively know the type of investment approach that we are looking for. The team make themselves readily available to discuss matters and meet with us and our clients as required. Their clear communication enables us to understand the reason behind the actions they take, which is reassuring to our clients.

FACTCHECK

Total assets outsourced:

£20m

Average portfolio size:

£300k

Preferred platforms:

LV= SIPP for Pensions, otherwise direct with DFM    

DFMs currently used:

Rathbone Brothers, Brewin Dolphin

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship:  4

Past performance:  3

Reporting:  4

Size of firm:  3

Strength of process:  3


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Andrew Alexander is head of investment at Campbell Thomson, where his main role is to oversee its investment process, including strategic & tactical asset allocations and security selection. He graduated from Leicester university in 1995 with an honours degree in geography and has over 13 years’ experience in financial services. He is a member of the Chartered Financial Analysts Society of the UK and an Investment Management Certificate holder. 

Campbell Thomson has offered specialist financial advice and financial planning across the UK for individuals and businesses since 1978. The firm is set to advise a new generation of clients.

What are the most important factors for you when selecting a discretionary manager?

Communication is paramount: the ability to sit down and talk through managers’ thoughts on the market and how they are applying them is absolutely critical. There are too many cookie-cutter and plain vanilla propositions out there. We want to deal with someone who actually has ideas about how we want our money invested and can explain how they will apply them, not just be a salesman in a sharp suit.

What are the least important factors?

A fancy website and lots of generic types of mailouts. It is not telling us or our client anything useful because it is not about their investments. The size of the business is not important. We do not want to have all our assets with a boutique where we make up half their funds, but when it comes to national firms, assets under management make very little difference.

Why did you select your current provider?

It comes back to communication. Too many managers come in and assume we are desperate for someone to take away the burden of managing money from us. Brooks Macdonald, however, came in and actually asked us how they could work within our investment process, and respected that we had views and ideas about how we want to do things.

FACTCHECK

Total assets outsourced:

£6m

Average portfolio size:

£300k

Preferred platforms:

Axa Elevate, Aviva Wrap   

DFMs currently used:

Quilters, Brooks Macdonald

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship - 4

Past performance - 1

Reporting - 3

Size of firm - 1

Strength of process - 4


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Steve Collyer is a bachelor of law with more than 22 years’ experience in the financial planning sector. He joined Hampton Dean as managing director in 2003. 

Hampton Dean employs 37 staff including 11 advisers. Its clients range from the mass affluent (including more than 2,000 doctors) to HNW businessmen and retirees.

The firm has grown through acquisition and a strong focus on marketing for new clients with affiliations including the Country Land and Business Association and a new initiative in the ‘At Retirement’ market. Hampton Dean considers itself a professional financial planner rather than part-time investment manager and so often outsources to DFMs. It uses model portfolios on wrap for smaller clients, populated with a blend of multi-asset funds.

What are the most important factors for you when selecting a discretionary fund manager (DFM)?

Having had a bad experience with a DFM who allowed the individual manager to go off piste, we prefer DFMs with a robust and centralised investment process.

We often ask our DFMs to meet clients, and their ability to successfully communicate with normal people is therefore crucial. Pricing is becoming increasingly important and we are pushing towards a point where the overall investment solution (inclusive of our fee) needs to come in at less than 2%. We expect our DFMs to work hard for their money and we have a policy of close monitoring and accountability.

What will make or break a pitch?

I need to have a tangible reason for using one DFM rather than another and I need to be able to communicate that reasoning to our advisers who, in turn, need to explain it to our clients.

If the pitch is too complex or confusing for me, I am unlikely to pass it on. Pricing, performance, process and service delivery are the factors that really matter to us. Mountains of glossy brochures, fancy offices or masses of statistical information are unlikely to carry much sway.

What were the reasons for selecting your current providers?

We work closely with three DFMs, all offering a different style of management: long-only, absolute return or a brokerage style with very active stock-picking. We find clients are interested in differing approaches according to their circumstances and objectives.

FACTCHECK

Total assets outsourced:

£172 million

Average portfolio size:

£250,000

Preferred platforms:

Standard Life Wrap    

DFMs currently used:

Brown Shipley, Standard Life Wealth, Charles Stanley

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship: 4

Past performance: 3

Reporting: 3

Size of firm: 3

Strength of process: 5


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David Otway is co-director of TWP Wealth. He has 30 years of advisory experience, and a huge personal drive to build a lasting proposition for clients and a business sustainable within a modern regulatory framework.


At TWP we’re passionate about financial planning and managing your wealth. We provide you with financial peace of mind by taking a realistic and complete approach to managing your money.

Our investment expertise is built on prudence and sound judgement. Unlike most investment firms, we do not focus on chasing headline returns.

What are the most important factors for you when selecting a DFM?

Having an investment style that fits with what our beliefs are and what we are communicating to clients. Being prepared to hold large amounts of of cash when necessary. Not benchmarking against indices. Cost is paramount.

What are the least important factors?

Name awareness, size, location. DFMs must be able to speak to real clients in their language.

 What were the reasons for selecting your current provider/s:

Costs. Very comfortable with the whole team at London & Capital, their knowledge, back office and investment style. We buy people – and their people are very good. Their processes are repeatable and provide above average returns.

FACTCHECK

Total assets outsourced:

£5m

Average portfolio size:

£150k

Preferred platforms:

Transact, Standard Life 

DFMs currently used:

London & Capital

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship - 5

Past Performance - 4

Reporting - 3

Size of firm - 3

Strength of process - 5


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Peter Chadborn is a director and adviser at Plan Money and has over 20 years’ experience providing financial planning advice. Plan Money was launched in 2010 by Chadborn and colleague Peter Wright, who rebranded the firm, previously CBK Colchester, to reflect its focus on financial planning.

Plan Money and its multi-award winning advisers provide financial planning across the whole spectrum with a strong focus on building lasting relationships supported by regular reviews and face-to-face meetings.

The firm operates a fee-based structure for investment clients with full disclosure of commission across all other product types.

What are the most important factors for you when selecting a DFM?

It has to be something we believe in, which means meeting more than one person within the firm. With all due respect, the person who comes to your office is normally from the sales team. We want to be able to go down and see them and speak to a number of people at a lot of different levels from the investment managers to the support team.

We want to make sure that top to bottom, there is a good collective there, sometimes you can be disappointed when the shiny person they send to see you isn’t backed up by as strong a team as you’d like.

What made you decide to outsource in-house model investments?

We decided to move away from running in-house model portfolios to enable us to focus on financial planning and spending more time with our clients. One of the advantages of this approach is their expertise means they can act quickly to make changes as required: asset allocating between different asset classes and geographical regions, picking the right funds and making tactical decisions. We continue to monitor their behaviour and performance to ensure they remain fit for purpose.

What made you choose 7IM?

They matched our criteria of having a very personable service, controlling risk and managing the downside very well. They have an understanding of the importance of having a broad asset mix and can present that in a way that our clients understand.

They also use a blend of investments to keep costs down but are not too price conscious and are not benchmark constrained. Another big factor is that we can access their methodology through their range of Oeics. We have met four of the seven there and spoke with other people who use them and now solely outsource to them.

FACTCHECK

Preferred platforms:

7IM, Skandia 

DFMs currently used:

7IM

Total assets outsourced: 

£10m

Average portfolio size:

£300k

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship - 5

Past performance - 4

Reporting - 4

Size of firm - 3

Strength of process - 4


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Kevin Caple is a founding director of Caple Banks Ltd with over 20 years’ experience providing financial advice. He decided to set up Caple Banks in 2010, seeing a real business opportunity with the onset of the retail distribution review (RDR).

He established Caple Banks with his co-director Jody Banks, with a view to delivering the highest quality service and advice to its clients. The business is focused on developing long-term relationships, where clients are looking for the peace of mind afforded by regular reviews and updates. Having recently opened up a second office in Gloucester, the business has begun to enter an exciting period of growth.

What are the most important factors for you when selecting a DFM?

The service we deliver to our clients is highly personal, built on trust and shared values. This is mirrored in any business to business relationship we develop. We need to be comfortable that the individuals who we are recommending share our ethos to service quality and this forms the backbone of our diligence when selecting a DFM. Having a solid track record and experience managing assets in both good times and bad is also critical.

What are the least important factors?

We are less concerned with a DFM having a national or London-based presence. We prefer knowing that the company we recommend is accessible and available to our clients should they have questions or queries. Given that we typically run managed portfolios of collective investments in-house, we are also more concerned with finding managers who excel in managing direct equities, to offer additional, complementary exposure within investors’ portfolios.

What will make or break a pitch?

It is vital the DFM is open and honest with us about their strengths and weaknesses. A pitch would be broken if the company was not able to demonstrate how they will continue to adapt and develop in the post RDR world. A willingness to learn about Caple Banks and develop ways of dovetailing the DFM offering to our own service offering is critical if we are to work together. It is also vital that we have a direct relationship with the key individuals involved in managing clients’ assets.

FACTCHECK

Total assets outsourced:

£12m

Average portfolio size:

£139k

Preferred platforms:

Standard Life and Transact

DFMs currently used:

Signature

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship - 5

Past performance - 4

Reporting - 3

Size of firm - 1

Strength of process - 3


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Nicola Watts joined the family business in 2000, following a brief career in recruitment. She qualified to provide advice in 2001, and has been a director of the business since 2006. She is also involved with Pfeg, an organisation that assists young people with developing financial skills.

Jane Smith Financial Planning has been providing specialist advice to a wide range of clients for nearly 20 years. We have built a strong reputation for provision of sound financial planning advice tailored to the individual needs of both private individuals and small businesses.

What are the most important factors for you when selecting a DFM?

The main things we look for is someone who is able to work within the framework we have built and are happy to use the systems we have in place. We have built the architecture, and the discretionary manager is then providing a service within that. One of the main things we want to be able to provide our clients with is a quarterly update on their portfolio, written in plain English. 

 What are the least important factors?

Ultimately, financial strength and resilience are of course important, but we already know all that if we have invited you to pitch for the business. Whether you have a 10-year history or a 110-year history really isn’t important to us, so long as you have a decent performance track record.   

What will make or break a pitch:

If we are faced with two managers who are both well matched to our client needs and have a good understanding of what we do, it will come down to who the client is most comfortable and confident with. We also want to ensure that the primary client contact is the manager, rather than an account manager.

FACTCHECK

Total assets outsourced:

£10m

Average portfolio size:

£100k

Preferred platforms:

Cofunds, Novia

DFMs currently used:

London & Capital, Smith & Williamson, Rathbones etc

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship - 5

Past performance - 4

Reporting - 5

Size of firm - 3

Strength of process - 4


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Martin Cawley is CEO of Devonshire Wealth Management with more than 20 years’ experience in wealth management. He joined Devonshire in 2001, became a director in 2006 and CEO in 2009.

Devonshire Wealth Management is a bespoke, fee-based wealth manager, based in London’s West End. We work closely with introducing firms of lawyers and accountants and have done for over 20 years. The key to our business is the long-term relationships that we build and maintain with our clients and introducers.

What are the most important factors for you when selecting a DFM?

We are a small business and we pride ourselves on giving clients high levels of service, and this remains important when looking at a DFM proposition.

We use DFMs that work on a team basis but are extremely personable and construct bespoke, individual portfolios on individual client’s personal requirements. We look at firms that are large enough to provide a full and cost-effective service, but small enough that our business matters to them, and where we have a culture fit.

Regular comunication with the DFM is imperative. As an example, we speak to Brooks Macdonald on a daily basis about various client issues and performances. It is a great way to get to know someone, warts and all.

What are the least important factors?

Grand offices on prestigious streets do not impress us. We like to look the decision maker in the eye, and the performance and risk management of our clients investment accounts are of primary importance.

What will make or break a pitch:

When an investment manager pitches solely on past performance and puts across a managed portfolio proposition. We view DFM as a route for bespoke, individual, personal portfolios that sit on wrap platforms. DFMs need to take the time to understand our clients and our business, and not to pigeon-hole our clients and us. A clearly defined team-based investment proposition is key.

FACT CHECK

Total assets outsourced:

£60m

Average portfolio size:

£500k

Location:

London 

Preferred platforms:

Elevate

DFMs currently used:

Brooks MacDonald, Quilters

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship - 4

Past performance - 2

Reporting - 5

Size of firm - 3

Strength of process - 1


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Sharon Critchlow is the operations and compliance director of the Citimark Partnership, a chartered financial planning practice in Bristol. She is a chartered and certified financial planner as well as a chartered certified accountant.

For more than 25 years, Citimark has specialised in wealth management for high net worth individuals, delivering personal as well as corporate financial planning. The practice has been fee-based for nearly a decade, with total advisory and outsourced funds in excess of £160 million. Staff head count now stands at 19, from seven nearly three years ago.

What are the most important factors for you when selecting a discretionary fund manager (DFM)?

A dedicated team who understand our business, our clients and the service we provide. We expect a flexible approach to charging and regular reporting in terms of individual portfolio commentary and monthly performance overview. DFMs need to have a repeatable and logical process for investment selection and be at the cutting edge of technology in terms of integration with our systems. They need to have experienced and knowledgeable staff with excellent people skills, who can advise on collectives and individual shares, as well as an experienced administration function. We find that larger, well established firms with a history of working with financial planners provide a more comprehensive service and make better partners with whom to work.

What are the least important factors?

London offices, private dining and tickets to the rugby are useful tools for building rapport between the client and DFM once a relationship has been formed, but have very limited appeal to us in deciding whether a DFM is suitable.

What will make or break a pitch?

A presentation that is out of touch with the needs of us and our clients. We need due diligence information, a process document and a range of charging structures at the very least. What we usually get is a generic brochure, the standard charges sheet and told they have a website – doesn’t everyone? Companies presenting a sensible documented process, asking what our clients need and are willing to adapt to fit with our expectations are more likely to be asked back.

FACT CHECK

Preferred platforms:

No preference

Which DFMs do you currently use?

Brooks Macdonald and Quilter

Total assets outsourced:

£100m

Average portfolio size:

£500k

WHAT DO YOU VALUE MOST IN A DFM:

On a scale of one to five where five is the greatest

Relationship: 5

Past performance: 4

Reporting: 4

Size of firm: 4

Strength of process: 5

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David Rouse is the Principal Financial Planner at Friar Gate and has over 15 years’ experience in Financial Planning. David holds the Investment Management Certificate and is a Certified Chartered Financial Planner. He became a Fellow of the Personal Finance Society in 2009.

The sister company of an accountancy practice, Friar Gate was established in 2004 to provide a holistic financial planning solution to clients referred by professional practices.

What are the most important factors for you when selecting a discretionary fund manager (DFM)?

Full independence, a robust and repeatable investment process, ability to react quickly to market events and changes in market sentiment. Cost is another factor in an increasingly competitive world. Additional services such as assistance with capital gains tax planning.

What will make or break a pitch?

A clear, logical and demonstrable investment process that has a medium term track record or longer of outperforming its benchmarks in terms of physical and risk adjusted returns. Turn offs include an inability to adequately explain the total expense ratio for the portfolio and also for the DFM to require any direct contact with the client. The relationship is between us and the client.

What are the least important factors?

Invitations to lavish functions and foreign trips are great on paper but I do wonder exactly where the money comes from to pay for them.

FACT CHECK

Total assets outsourced:

£20m

Average portfolio size:

£175k

Preferred platforms:

Skandia Investment Solutions, Novia

Which DFMs do you currently use? 

7IM, currently in process of selecting other partners.

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship: 2

Past performance: 3

Reporting: 4

Size of firm: 4

Strength of process: 5


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Jill Thomas is managing director of Future Life Wealth Management Limited (FLWML), with more than 30 years in the financial services market, 16 years as a financial planner.

Future Life Wealth Management Limited has been trading for two years. The financial meltdown of 2008 shook the foundations of the investment advice industry. Amidst this carnage, Future Life Wealth Management Limited (FLWML) was born out of our deep understanding of the need to find new and better ways to offer financial advice. 

What are the least important factors?

The main issue we come up against is people not listening to what we ask for: too often we will send details of our clients and they haven’t listened to a word we have said, and we receive a standard pitch in response. Too many seem to think that big is beautiful, and go on about the mega-billions that they manage, which may be important, but only if you have a level of performance to go with it.

What will make or break a pitch?

If a provider is able to use simple, straightforward English, it is a lot easier for the client to understand why we have selected it.

A lo t of computer systems seem to have been designed for the company’s benefit rather than the client’s, and they eventually just give up trying to use it – they just want to be able to see what is happening to their portfolio. Because we are north of Watford there can be a perception that we are less important than a business based within the M25.

What are the most important factors for you when selecting a discretionary fund manager (DFM)?

The main issues that we are looking for are a transparent statement on total expense ratio – not annual management charge– the style of research, and the decision-making process. It has to offer our clients an easy-to-understand proposition, with open architecture and no commission.

Our clients are not looking for a brand – they just want to know the company we have selected will offer them good performance for a reasonable cost.

FACTCHECK

Total assets outsourced:

£30 million

Average Portfolio size:

£45k

Preferred platforms:

Seven IM, Investec and Vestra

Which DFMs do you currently use:

Seven IM, Investec and Vestra

WHAT DO YOU VALUE MOST IN A MANAGER:

On a scale of one to five where five is the greatest

Relationship: 3

Past performance: 4

Reporting: 4

Size of firm: 3

Strength of process: 5


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Carl Lamb is the managing director of Almary Green Investments and has nearly 25 years’ experience in the financial services industry, 11 years of which have been spent running an IFA firm.

Almary Green Investments is an IFA firm with about 7,500 clients and £300 million of funds under management. It celebrated its 10th Anniversary in 2011 and has 17 registered advisers and 17 support staff based in Norfolk, Suffolk and Cambridgeshire, supporting businesses and individuals throughout East Anglia and beyond.

What are the most important factors for you when selecting a discretionary fund manager (DFM)?

The willingness of the DFM firm to work with us for our mutual benefit is important. It has to be open to conversations concerning driving down costs for our clients. I like firms to be able to provide flexible investment strategies aligned to our clients’ requirements, including access to model portfolios. Streamlined processes and administration are also required. The support provided to us and the client is important, including training on their systems and the accessibility of the fund managers.

What are the least important factors? 

Firm size is not too important. People and processes are key. A fancy pitch with numerous Powerpoint slides tends to turn me off as I prefer informal discussions round a table. I don’t get too excited about intricate research software.

What will make or break a pitch? 

The cost to the client is crucial. If the firm’s management is too expensive or they are not upfront with all charges, such as probate fees, I will not use them. A robust investment process with a choice of strategies to match varying risk profiles is important, as are regular reviews. I don’t rely on past performance alone, though a consistently good track record over a variety of portfolios will help the decision. I like the ability to pick up the phone to speak to an investment manager at any time.

FACT CHECK:

Total assets outsourced:

£80 million

Preferred platforms:

Skandia, AXA Elevate, Fidelity

Average portfolio size:

£200,000

Which DFMs do you currently use?

Principal, Vestra Wealth, Jupiter

WHAT DO YOU VALUE MOST IN A DFM:

On a scale of one to five where five is the greatest

Relationship: 5

Past performance: 4

Reporting: 4

Size of firm: 3

Strength of process: 5


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Richard Hancock is an investment analyst at Financial Management Bureau (FMB) and is responsible for selecting, researching and monitoring all investments, products or services used by the company. As well as research and due diligence, he also chairs the investment committee and was largely responsible for redefining the company’s investment process. He is qualified as an adviser, has completed the IMC and intends to embark upon the CFA qualification in the near future.

FMB is a financial planning firm that has been serving the needs of the local and wider community for over 25 years.  It has approximately £275 million assets under management, with around 2,000 clients. Its focus is on long-term financial planning, such as cashflow modelling, and developing long-term client relationships.

What are the most important factors when selecting a discretionary fund manager?

A solid process using a truly multi-asset approach with a focus on client-friendly outcomes rather than returns relative to an index or other arbitrary benchmark. We prefer a process and ethos that can be easily explained to clients regardless of the complexity of the underlying instruments used to actually represent these views.  Aside from the investment process, a DFM must be able to give the levels of support both we and our clients expect, such as face to face meetings, seminars and direct access to the managers themselves as and when necessary.     

What are the least important factors when selecting a discretionary fund manager?

While cost is obviously important, we believe what is far more important is the total returns net of charges the client ends up with. There is no point having a cheap service that produces poor returns or outcomes that are not in line with client needs.  It is also not necessary to be a massive company as long as you have sufficient resources to provide the levels of service required.

What will make or break a pitch?

An ability to clearly demonstrate where value is being added, a well-defined and well thought out process with client friendly aims and objectives combined with a track record of being able to deliver on those promises. The DFM has to have a proposition suitable for the segment of clients we are looking to use them with.

FACTCHECK

Total assets outsourced:

£175m

Average portfolio size:

£150k

Preferred platforms:

Ascentric, Cofunds, Skandia

DFMs currently used:

Saltus, Rathbones, BestInvest

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship - 4

Past performance - 3

Reporting - 2

Size of firm - 1

Strength of process - 5


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Alistair Creevy is managing director of Independent Advisers Scotland, which he founded in 2003 after a 25-year career in financial services, including spells at Clerical Medical, Standard Life and Pearl Group and in various management positions. He is a former chair of the Life Assurance Association of West Scotland and is a member of the Institute of Financial Planning and the Personal Finance Society.

Independent Advisers (Scotland) was established almost 10 years ago and covers clients across the east coast, with advisers in Glasgow, Inverness and Thurso. Initially part of the Inter-Alliance network, the firm went fully independent in 2004.

Most important factors for you when selecting a DFM?

The most important factor is the individual we will be dealing with – are they on the same page as us; are they on the same wavelength; do they understand our vision of what is right for the client? We need to know we can have a good relationship, and be comfortable with the person we have to work with. Local offices [Edinburgh or Glasgow] are essential.  

What are the least important factors?

The company background. We already do a lot of due diligence and don’t need to hear how wonderful they are or how many years they have been around – we will already know why we are interested in them. When a discretionary manager tells us why they are right for our clients: that is our prerogative. We don’t want to hear why they will be of benefit to the client, because they will be dealing with us, not them. 

What will make or break a pitch?

We need to find out how they work and what sort of service we can expect. All discretionary managers aim to beat a benchmark – we take that for granted so we want to know what they can do above and beyond that. We need to know we will be kept in the loop and will receive a call whenever circumstances change. It is also important that managers actually read the specific introduction which we will send them before meeting.

FACTCHECK:

Total assets outsourced:

£35m

Average portfolio size:

£250k

Location:

Scotland 

Preferred platforms:

Standard Life

DFMs currently used:

Quilter

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship - 5

Past performance - 4

Reporting - 5

Size of firm - 3

Strength of process - 5


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Pierre Coussey is director of pensions & investment strategy at Wealth Connection Ltd, and has 25 years’ experience in financial services both at the largest providers in the UK and at the coal face in private practice.

Wealth Connection provides professional advice on investment interests’ worth over £300 million for private individuals, companies and employers.

What are the most important factors for you when selecting a discretionary fund manager (DFM)?

A robust investment process, the most appropriate investment style to match the client’s objectives and risk tolerances, and transparency of fees. The investment process must be consistent, repeatable and dynamic. We expect DFMs to manage risk effectively moving risk on/off as appropriate. We use Arc indices to check performance and consistency. ARC’s Suggestus website helped us choose DFMs with different investment styles to suit all our client needs. Transparent fees are hugely important.

What are the least important factors?

How they perform against an irrelevant benchmarks such as the FTSE 100 or Apcims. For us, giving the DFM a clear mandate to work to makes the review process much easier. This includes client objectives, benchmarking – eg, inflation + 3% with a volatility of 8.5%, and ongoing monitoring – how has the portfolio performed each year and cumulatively? How much risk has been taken? Is the performance in line with expectations? Do you need to review the objectives? Do you need to review the investment manager?

What will make or break a pitch?

Empathy with the client can make or break a pitch. The DFM must understand the client and their objectives and, where possible, their personality. We do a lot of work pre-pitch to ensure they are fully briefed and to match the relevant investment director to the client. Accessibility to the investment directors within a firm enables you to ensure you get the right people at a pitch, and that they communicate with the right level of detail and statistics.

Fact check:

Total assets outsourced:

£100m+

Preferred platforms:

SEI for retail clients

Average portfolio size:

£210k

Which DFMs do you currently use:

PSigma

(Other managers are short-listed for use where appropriate)

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship: 4

Past performance: 4

Reporting: 3

Size of firm: 2

Strength of process: 5


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Dennis Hall is founder and managing director of Yellowtail, and has over 25 years’ experience in  financial planning. A chartered financial planner, he started the firm six years ago with an eye on the retail distribution review.

Yellowtail is primarily a financial planning firm, but seeks to develop long-term relationships with clients by providing annual financial planning reviews alongside a low cost, passive investment management service.

What are the most important factors for you when selecting a discretionary manager?

Cost is one of the reasons that we run passive portfolios, because we believe it is one of the few things we can control. We look for a willingness to work with us as the financial planner, and for them to be comfortable with us acting as the gatekeeper. Additional services are as important as the portfolio management, in particular the ability to borrow against assets, helping with capital gains tax planning, short-term liquidity needs, and preservation of tax wrappers. We see these relationships as partnerships not a supplier/buyer style of operating.

What are the least important factors?

History. On a more serious note, wood panelled meeting rooms, huge atriums and invitations to dine in private dining rooms are nice, but one wonders who is paying for it all. Who needs large and expensive research teams? We don’t believe they are adding value. A central location is important, and it needs to be smart and practical, but expensive art works are not necessary.  

What will make or break a pitch?

When a portfolio manager puts their mouth into automatic mode and starts talking about their financial planning arm, that doesn’t go down too well. But if they introduce the back office team and can demonstrate excellent processes, diligent team players and people prepared to take responsibility: those are the things that have real positive influence. Other spoilers are: an over-reliance on past performance; charging an arm and a leg for a portfolio stuffed with funds of funds; and quoting a price and then trimming it to win the deal – simply give us your best price first. Poor grooming is another turn off.

Fact check:

Total assets outsourced:

<£10m

Preferred platforms:

Raymond James Investment Services

Average portfolio size:

>£500k

Which DFMs do you currently use:

UBS, Williams de Broë, 7IM

What do you value most in a discretionary manager?

On a scale of one to five where five is the greatest

Relationship: 1

Past performance: 3

Reporting: 4

Size of firm: 5

Strength of process: 2


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Robert Tiffin is a Citywire ‘Top 30 under 30’ Wealth Manager 2011 and an independent wealth manager working with individuals, trusts and corporate clients to help them plan for and achieve their long-term financial goals and objectives. 

RT Financial Planners Limited is a firm of IFAs. Directly regulated by the FSA, it offers whole-of-market solutions as well as chartered financial advice.

What are the most important factors for you when selecting a discretionary fund manager?

I believe a solid long-term relationship between the triumvirate of client/wealth manager/investment manager is key to any successful investment outsourcing decision.

I like to meet all the people involved in the investment process and know them by name. It is imperative that I and my clients feel comfortable and happy working with them in the medium to long term and the selected investment solution is designed with this in mind.

It is fundamental the same team be assigned to the project throughout. Changing faces year in, year out is never good and restricts the potential for a long-term successful working relationship with an investment partner and the possibility of future referrals.

What are the least important factors?

The size of the investment manager’s balance sheet or assets under management is often over-emphasised and used within a pitch as a key reason for using a particular investment solution.

While financial security is integral to proceedings, what matters more is how rigorous the asset allocation and stock selection processes are, what the charges are like and what level of ongoing service and reporting will be provided to the wealth manager/IFA and their clients.

What will make or break a pitch?

The overuse of investment jargon can be detrimental, especially when used in front of a client who has no idea what some of the terms mean. Honesty and accountability are the core values I look for. I prefer to use a good value, goals-based form of investment management that will strive to provide returns in line with the client’s expectations in all market conditions rather than outperforming certain benchmarks over a given period. 

FACT CHECK:

Total assets outsourced: 

£3 million

This to increase exponentially during 2012.

Preferred platforms:

Standard Life Wrap, Transact, Aegon SIPP and Offshore Bond

Average portfolio size:

+£100,000

Which DFMs do you currently use:

Deutsche Bank, Standard Life Wealth, Russell Investments, Close Brothers.

WHAT DO YOU VALUE MOST IN A DFM?

On a scale of one to five where five is the greatest

Relationship: 5

Past performance: 4

Reporting: 4

Size of firm: 3

Strength of process: 5


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Colin Low is financial planning director and a chartered financial planner. He works with the senior paraplanner to determine the processes the firm puts in place to make recommendations that provide the most consistent and appropriate outcome for our clients.  

Kingsfleet Wealth is a chartered financial planning firm. It works with solicitors and accountants, assisting them in financial planning.  It has operated a fee-based model since launch.

What are the most important factors for you when selecting a DFM?

Listening to our approach and offering a complementary service is crucial. Too often we meet DFMs who tell you what they are going to do before they have listened to your needs. The other important issue for us is the allocation of an experienced and knowledgeable member of staff. I can tell when people are bluffing, and it is embarrassing to sit in a meeting with a client and realise the representative is unsure about their own process.

What are the least important factors?

Funds under management mean nothing – that just means the DFM has accumulated assets. It’s like saying that you should buy a car with 200,000 miles on the clock: it might have worked in the past but it is not necessarily appropriate now. The ability to pick individual equities is not important. With all due respect, we remain unconvinced that a DFM can do this better than Neil Woodford, Tom Dobell or Adrian Frost. Either buy an index fund or select an active manager.

What will make or break a pitch?

It comes down to two things: can the message be supported by evidence and do we get on with the individuals that we are meeting with? If the message cannot be supported by documentary evidence then we would struggle to recommend the service to our clients. Up until this point, we have outsourced very little, which is why we are exploring a ‘third way’, where we can work with a DFM to form an investment committee and be a part of the process. 

FACT CHECK

Total assets outsourced

Approximately £5 million

Preferred platforms:

Skandia, Novia, AXA

Average portfolio size:

£300,000

Which DFMs do you currently use?

Hawksmoor, 7IM ‘Good ones’

Saltus, Standard Life Wealth ‘Could do better’

What do you value most in a DFM?

Relationship: 5

Past performance: 4

Reporting:  5

Size of firm: 1

Strength of process:  4

 


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Michael Roberts has been advising clients for 10 years, during which time he has developed a specialism in trusts and investments, although he remains a general practitioner. He holds the diploma in financial planning and is working towards chartered status.  

Protect and Invest started in 2005 as part of a firm of chartered accountants and most of its clients are business owners, senior employees or retired. Roberts and business partner Melvin Czapalski completed an MBO two years ago.

What are the most important factors for you when selecting a discretionary fund manager?

I believe true discretionary management is an elite service for our wealthy clients, so it goes without saying that excellent service is of paramount importance. A strong investment process, with the ability to give an indication of expected return and volatility, helps with planning. I prefer to see more added value from a DFM than simply following a benchmark and switching funds without having to gain client authority first.

What are the least important factors?

A smart, professional office is important to create the right impression, of course, but remember the client is visiting their investment manager and not an art gallery, so expensive sculptures and works of art are not required. The same goes for private dining rooms and butlers; such things are more likely to turn off rather than impress.

What will make or break a pitch?

The age old adage ‘people buy people’ couldn’t be more accurate. In our experience, clients want an investment manager they feel comfortable dealing with, someone who will listen to them, understand their concerns and objectives, and can talk to them on the same level. Talking at a client for an hour with a generic sales pitch or trying to blind them with science doesn’t go down well. Clients are generally investing large sums when using a DFM; give a tailored presentation and bear in mind that the client may be wealthy, but that doesn’t make them an investment expert so avoid jargon and talk in plain English.

Total assets outsourced:

£10 million

Preferred platforms:

Nucleus, Skandia

Average portfolio size:

£350,000

Which DFMs do you currently use:

Quilter, Cazenove, 7IM, Standard Life Wealth, Investec

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship: 4

Past performance: 2

Reporting: 3

Size of firm: 1

Strength of process: 5


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John Pullin is director of Alan Boswell & Co with over 25 years’ experience and specialises in investment planning and pensions, both corporate and individual.

Alan Boswell & Co is the financial services company of the Alan Boswell Group. It was established to build long-term trusted relationships between its clients, professional connections and high calibre, qualified financial planners. It is based in seven locations including Norwich and London.

What are the most important factors for you when selecting a discretionary fund manager (DFM)?

We use a comprehensive due diligence process, which includes a questionnaire identifying key factors such as funds under management, ownership structure, tax wrapper and platform access, model portfolio and/or bespoke services, investment philosophy and measures/controls. We then meet with the firm’s key investment managers to gather further information on risk and goals. In seeking a DFM, we like to use those that offer a robust investment process, but also have the flexibility to create bespoke portfolios to meet our clients’ needs.

What are the least important factors?

Glossy brochures and exotic locations. I would rather have a clear reporting and easy to understand investment philosophy of a client’s portfolio, than 60 pages of facts and figures that mean little to anyone other than a technical analyst.

What will make or break a pitch?

Interest in our client’s objectives and aims coupled with a robust fact finding process and risk assessment, which complements our own. A professional, friendly DFM team, which makes it easy for us to do business.

FACT CHECK:

Total assets outsourced:

£92 million

Preferred platforms:

Cofunds, Standard Life, Ascentric

Average portfolio size:

£700,000

Which DFMs do you currently use:

Brewin Dolphin, Williams de Broe, Standard Life Wealth, Rometsch & Moore, Cheviot and Berry Asset Management.

WHAT DO YOU VALUE MOST IN A DFM:

On a scale of one to five where five is the greatest

Relationship: 3

Past performance:  4

Reporting: 5

Size of firm: 3

Strength of process: 5


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Mark Hibbitt is a financial services graduate with 13 years’ experience in the financial services sector. He joined Sovereign in 2009 with the task of helping the business make the transition to a retail distribution review-ready IFA practice.

Sovereign is a small firm dealing primarily with private clients who require a proactive review service that takes a holistic approach to financial planning.

What are the most important factors for you when selecting a discretionary fund manager (DFM)?

Investment philosophy is key. We don’t want to deal with DFMs that are focused on benchmarks. We want to work with DFMs who believe the only important benchmark is cash and who will be prepared to make big moves in order to safeguard clients’ money. Willingness to run money via a third party authority on a wrap or platform is also important. The client is ours, and if we feel we need to change DFMs, we want the process to be no more hassle than fund switching is.

What are the least important factors?

A so-called bespoke service. We don’t believe it exists in many cases, and feel that a range of risk-graded portfolios suffice in 90% of cases where a DFM is recommended. Client contact is also not important to us. We are the adviser and the relationship is between IFA and client – the DFM is simply appointed to do what they do best: run the portfolio.

What will make or break a pitch?

A DFM will get our interest when they tell us they are not interested in speaking with the client, have no interest in Apcims benchmarks and believe the first rule of making money is not to lose it in the first place. Turn-offs include DFMs that struggle to provide snapshot total expense ratios for their portfolio, ones that insist on client contact and/or tell us what they do is ‘bespoke’.

Fact Check

Total assets outsourced:

c. £15 million

Preferred platforms:

Ascentric, Parmenion

Average portfolio size:

£130,000

Which DFMs do you currently use:

Evercore Pan Asset, Close, Ingenious, Barmac, Parmenion.

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship: 4

Past performance: 2

Reporting: 3

Size of firm: 1

Strength of process: 5


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Alan Buet has been managing director of Delta Financial Management since 1988. He is also a qualified tax accountant. His main role is to oversee the activities of the business, and ensure it remains profitable and client focused. Since this leaves less time for him to advise full-time, he is gradually passing clients over to Delta’s other advisers. 

Delta Financial Management was established in 1982, and is an independent financial planning business with strong accountancy connections. Its focus is on developing strong, long-term, high value relationships with a limited number of high net worth individuals in need of a ‘financial butler’. The firm’s retail distribution review plans are well advanced but it continues to seek to evolve and enhance its proposition, even without regulatory pressure. 

What are the most important factors for you when selecting a discretionary manager?

The ability to listen to what the client wants and then to mould their investment process around those requirements. Cost control is an obvious factor but not a deal breaker. Ability to add value through buying different classes of investments (investment trusts, exchange traded funds, structured products, institutional investment funds) as opposed to just retail investment funds.  Clear and concise reporting. 

What are the least important factors?

History. That is yesterday’s news – we are looking forward, not backwards. A company may have 10 years’ experience or 100 years, it just needs to be able to demonstrate its skill set over a reasonable timeframe. Scales of the business are not so important – some of the largest companies do not offer the best returns or service. Location is not crucial, as long as we can access the personnel when we need to. 

What will make or break a pitch?

Not listening to the client’s requirements, or presenting to the husband when the wife makes the decisions. Over-charging or layers of charges. The inability to look and learn from past mistakes and to use that experience in a positive way in future. Being honest and open about past performance helps your chances.  

FACTCHECK

Total assets outsourced:

£100m

Average portfolio size:

£2m

Preferred platforms:

AXA, Skandia, DFM’s own platforms    

DFMs currently used:

Brewin Dolphin, Whitefoords, Brooks Macdonald

What do you value most in a DFM?

On a scale of one to five where five is the greatest

Relationship: 3

Past performance: 4

Reporting: 2

Size of firm: 1

Strength of process:  5


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David Thomson is chief investment officer at VWM Wealth Management and has more than 25 years’ experience in financial advice. He is a chartered banker and a fellow of the Securities Institute, and was The Scotsman IFA of the Year in 2010.

VWM Wealth Management was established to provide a boutique investment and financial advisory service for discerning investors in London, Glasgow and Edinburgh.

What are the most important factors for you when selecting a discretionary fund manager (DFM)?

Full independence and ability to invest in a broad range of potential investments and asset classes, with the flexibility to adapt. Clearly identifiable charges aligned to your objectives, for example, investment managers’ income directly related to your returns. Firms large enough to provide a full and cost effective service, but small enough that your business matters to them. As much contact as you like with the decision-makers, full telephone and email access at any time. Minimum annual face-to-face meeting. Ad hoc meetings as required.

What are the least important factors?

Re-balancing – especially if it is automated. We would rather run winners and cut losers than as Warren Buffett says ‘cut down roses to plant weeds’. Fancy offices – this just makes us wonder where the fees are going. People who don’t take the time to find out our needs to see how they can really help.

What will make or break a pitch?

Demonstration of a coherent, logical, repeatable investment process that has delivered above-average performance in the past.

FACTCHECK

Total assets outsourced: £75 million

Preferred platforms: Pershing and Standard Life

Average portfolio size: £350,000

Which DFMs do you currently use: Currently selecting partners

What do you value most in a DFM? 

On a scale of one to five where five is the greatest

Relationship:  3

Past performance:  2

Reporting:  4

Size of firm:  5

Strength of process:  1


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