As an observer of the financial advice and discretionary fund management (DFM) sectors, the white-labelling of investment solutions is a topic that I have given much thought to over the years.

In spite of the potential advantages, the rate of adoption has been slower than I would have anticipated. This could be down to a willingness amongst advice firms to engage with the idea, or the openness of DFMs to work with advisers in this way.

Whatever the reason, looking forward I believe there is scope for this trend to pick up. In fact, 2019 could prove to be the year of the white-labelled investment solution amongst the advice sector.

This view reflects how far the profession has travelled over the past five years. When I worked for SEI a number of years ago, white-labelling simply involved placing an adviser’s logo on a few fact sheets and rebranding an investment presentation, then calling it ‘XYZ Adviser’s investment proposition, powered by SEI’. By contrast, today it is about true collaboration.


Finding the right partner

For any financial advice firm looking to partner with a DFM to create a white-labelled investment proposition, it is incredibly important to find a DFM that shares your world view on investing and wants you to be actively involved. The key to any successful white-labelled relationship is to ensure that both parties take ownership.

One of the biggest advantages of white-labelling is that the adviser can tap into the tools, expertise, and resources of the DFM while retaining control of the client relationship – overcoming this commonly cited hurdle associated with using a DFM. What’s more, the adviser retains their own brand and can continue to align the investment proposition with their own value proposition, if this is the positioning they have used to date (advisers tell me this is the single biggest barrier to switching from an in-house investment proposition to using third party DFM services).


Due diligence is key

Of course, if your investment proposition is going to be managed externally, it is important to get it right: it forms the engine behind your client’s financial plan and will ultimately enable them to fulfil their objectives.

This highlights a potential disadvantage associated with the process of setting up a white-labelled partnership – namely, the time and effort involved. You will need to make sure you find the right partner, because as I’m sure you can imagine, a significant investment of time and resource is required at the set-up stage. And, unlike using a managed portfolio, it’s not easy to make a quick switch to an alternative DFM on the same platform if you’re unhappy with the relationship. With this in mind, the role of due diligence will take on even more importance.

I recently caught up with Leigh Stephens, Head of strategic partnerships and a director at Tacit Investment Management, whose firm has extensive experience consulting and setting up white-labelled investment propositions for advice firms. It was interesting to hear his views on the topic.

He outlined some of the potential advantages associated with white-labelling, but questioned whether we will see adoption amongst the larger peer group (see the video below to find out more).

Don’t forget MI

Another factor that is critical to the success of a white-labelled relationship is for the DFM to be able to help the advice firm to collect and utilise insightful management information (MI). Many advice firms struggle to ‘see’ the clients in their legacy books, hindering their ability to deliver appropriate solutions to these segments. A good white-label partner can deliver MI to help overcome this issue.

A process that I hold dear to pretty much everything I do is to constantly review what is going well in a working relationship, what could be improved, and whether things could be done differently. With a white-labelled investment solution, both parties need to monitor whether the relationship is meeting expectations – and MI can also form a core part of that. Having access to this information will enable both sides to have productive conversations on an ongoing basis.

Leigh shared his views on how advisers can improve the MI they collect – representing an area where his firm has gained some insight after working with advice firms on a consultancy basis over the years.


Watch the video below to find out more (it’s just 3:58)




This article was created for the DISCUS website following a discussion with Leight Stephens of Tacit Investment Management. To find out more about Tacit please visit their dedicated page here.