Companies have long grappled with the question of what their brands mean to their customers – and this is no different for discretionary fund managers (DFMs) and advisers alike.

At DISCUS we have given a lot of thought to the importance of brand when an adviser selects a DFM and the answer we have come to may prove surprising to some of you.

Historically, a number of financial advisers have told us that partnering with a big DFM with a recognisable name provides the underlying client with a degree of comfort, making it easier to introduce a third-party into the advice process.

However, we see a growing body of evidence which suggests that brand has less of an influence on the DFM selection process than you might expect.

Firstly, I’d like to highlight the findings of an AKG report that was published in June which explored how financial services has changed following the introduction of the Pension Freedoms in April 2015 (click here to find out more about the report). The report examined aspects of the adviser-DFM relationship and included the question: ‘What do providers need to focus on to be successful with advisers in the pension freedoms market?’

We found the answers to this question insightful, notably because only 6% of adviser respondents considered ‘brand’ important. The most popular answer was ‘service delivery standards’ with votes from 58% of the sample, followed by ‘product range’ at 54%. The third most popular factor was ‘financial strength and sustainability’, which was highlighted by 48% of respondents, with ‘digital/online capability’ in fourth spot with 45%.

Here’s the full range of answers from advisers…

What do providers need to focus on to be successful with advisers in the pension freedoms market?

  1. Service delivery standards – 58%
  2. Range of products/fund solutions – 54%
  3. Financial strength/sustainability – 48%
  4. Digital/online capability – 45%
  5. Technical support on tax and pensions – 33%
  6. Range of retirement planning tools – 14%
  7. Sales support – 11%
  8. Innovation – 10%
  9. Brand – 6%
  10. Cyber/data security – 6%
  11. Assistance with tools / information for DB transfer – 4%


Further evidence

Defaqto’s 2018 service review, which was based on 372 survey responses from financial advisers, tells a similar story. Their survey showed that ‘provider brand’ was ranked as the second least important factor for advisers when they select a DFM. It was followed by ‘remuneration’ in bottom position.

In joint top position was ‘investment flexibility for the range of assets’ and the ‘quality of investment staff’. Meanwhile, the ‘range of investment options’ and ‘service’ claimed second and third spot.

Our experience at DISCUS chimes with these findings. There’s no doubt that factors like service, proposition and performance are important to advisers when selecting a DFM. However, brand isn’t everything – and it can easily be confused with reputation.

At DISCUS we work with discretionary managers of different shapes and sizes, with a range of business models. This is because we want to give advisers as much choice as possible so they can put together a panel of complementary DFMs that are able to service different segments of their client-base.

Although our Compare tool recognises brands, we randomise these so advisers are not only drawn to well-known names. Adviser search results via the tool show that companies with lesser known brands appear time and time again, bringing traffic to their webpages; this happens because they are best suited to the needs of advisers’ clients.

Variation is the spice of life – and this is certainly something we want to highlight through the range of DFMs and propositions we have available for advisers to research. The best piece of advice we can offer to anyone who is selecting a DFM is to put brand perceptions to one side: the starting point must always be the client’s needs.