When asking advisers why they use bespoke portfolios for clients, responses often focus on the size of the client investment portfolio rather than the client’s specific investment requirements.

Many advisers believe that if the client is making a significant investment then they should meet with an investment professional. However, one of the downsides of this is the fear that the relationship between the adviser and client might be diluted. Indeed, one of the most popular articles posted on the DISCUS website Discretionary manager: predator or partner? addresses this concern.

According to PortfolioMetrix, meetings with the Discretionary Fund Manager (DFM) can be an expensive luxury which many clients don’t require. But does that also mean the clients needs to be put into a bog-standard model portfolio or multi-asset fund? Or is there another way to provide highly personalised and cost-effective outcomes where the client doesn’t need to meet the DFM investment manager?

PortfolioMetrix believes that there is and take a very different approach to the relationship between the discretionary manager, financial adviser and client. Customised portfolios are delivered through third party platforms supported by proprietary developed and owned world class technology which delivers a number of unique advantages to the adviser and client. Here are four of these advantages to consider:

  1. Suitability:

Many advisers want to retain control of client suitability and for some DFM bespoke propositions this is not typically how they operate. As a result, there can be grey areas as to where responsibilities lie. At Discus our advice is always to ensure clarity as to how the relationship will operate and ensure that is it covered in any documentation and legal agreements. If risk profiling is the responsibility of the adviser, then they need to work in partnership with the DFM to ensure that the portfolio is absolutely aligned to this.

Wealth Explorer™ from PortfolioMetrix delivers unique, and purpose-built technology to the financial adviser. A range of tools are available to ensure that the risk profile can be with the client, cashflow modelling completed and then a portfolio produced through a process which supports the construction of the investment mandate. The adviser owns the process until this point and the resultant tailored portfolio produced by the technology is absolutely aligned to the client requirements using PortfolioMetrix’s skills and expertise in portfolio construction and investment management.

The process doesn’t end here though and this is why an experienced adviser is essential. The adviser can spend time with the client, discussing their requirements, goals, ambitions and plans, ensuring all factors that may affect long-term financial planning are adequately addressed.

The PortfolioMetrix technology enables the adviser to further customise the portfolio to cover all the aspects that the adviser and client have discussed and delivers a robust portfolio that meets the needs of the client within appropriate risk levels.

Once in place, the technology ensures that the portfolio continues to align to these requirements, even during volatile market conditions, in the same way a bespoke portfolio would be managed. The process is overseen by the specialist investment team at PortfolioMetrix who are able to monitor thousands of bespoke portfolios on a daily basis to ensure they remain within the mandate constraints.

  1. Costs:

Meetings with a DFM can be an expensive luxury for many clients. In addition to the removal of DFM meetings, one of the key differentials of the PortfolioMetrix proposition is that the charge for the management of the portfolio can be kept lower. Custody of the assets sits outside PortfolioMetrix so they are able to work with the most cost effective and efficient platform technology. Clients’ assets can be on different platforms based on suitability, price and functionality.

As the portfolio is delivered through a platform, the client can often benefit from special terms on funds and also discounts are usually available based on the size of their portfolio. Any DFM portfolio can also be combined with other investments held on the platform to further maximise this.

One of the challenges of a bespoke portfolio is that clients may not have a portfolio which meets minimum requirements which can be around £250,000. However, the delivery of the portfolio through a third-party platform can remove this barrier and enable clients who typically couldn’t access a bespoke portfolio to benefit from a customised approach.

  1. Adviser fee

One of the most popular articles on the DISCUS website was Do you need to justify your fees when outsourcing? If the investments are being passed to a DFM where there is a direct relationship with the client then questions could be asked of the adviser charge, particularly when regular meetings take place with the DFM.

The proposition from PortfolioMetrix changes this dynamic as PortfolioMetrix leaves all client engagement with the adviser.  The adviser is able to easily monitor PortfolioMetrix to ensure that they continue to deliver to the risk profile agreed for their client.

As the actual assets are held on third party platforms, should the adviser decide that a different investment would be more appropriate, it’s straightforward to make changes.

This interaction with the process leads onto our final point.

  1. Control of the client relationship

By adopting this model, the control of the client relationship remains firmly with the adviser. As the portfolio is delivered through the platform, the adviser can always view the holdings and any changes made to the underlying investment instruments. They also have access to a selection of reports, market commentary and performance statistics all personalised to the client and that can be used at review meetings.

The reports produced by the investment experts at PortfolioMetrix include quarterly commentary on the economy, markets and changes in portfolios along with relevant information about client’s specific investments.

PortfolioMetrix also runs regular investment forums to explain to its adviser partners what changes have been made to asset allocations and investment instruments, providing detailed research so advisers are fully informed and able to decide how much information they share with their clients.

Documentation can be uniquely branded for advisers and positions PortfolioMetrix as a supporting partner.

This support ensures that the adviser can have good quality conversations with their clients and also avoids the additional costs of meeting with the DFM.

By partnering with PortfolioMetrix, financial advisers can concentrate on client relationships and financial planning with full confidence that the investments are being professionally managed.

In summary, the PortfolioMetrix proposition unusually delivers a bespoke portfolio to a client without the requirement of a meeting with the DFM. The other benefits of the proposition can be viewed on their dedicated page on the Discus website.