Wellian Investment Solutions is urging advisers to reconsider the benefits of outsourcing with model portfolios in light of a competitor’s decision to withdraw bespoke investment services for clients with less than GBP150,000 to invest.
Wellian has said that advisers should view this decision as an opportunity to consider some alternative investment options for clients who may not necessarily be suited to its competitor’s direct to client execution only offering.
Those clients affected by this decision have been given a 30-day notice period to decide what to do with their investments. After which time, they will be automatically moved across to the execution-only service.
However, Chris Mayo (pictured), Investment Director of Wellian Investment Solutions has said that rather than defaulting to this option, many of these clients could be suited to switching to a model portfolio solution that would be more cost effective and would still meet all of their requirements.
Mayo says: “We recognise that there are clients who have a set of unique needs and will be well serviced with a bespoke solution. For example, clients invested in unusual asset classes or with a preference for a certain investment style. However, the majority will find that they are well suited to a model portfolio for a wide number of reasons; namely, cost, control and compliance.
“As well the cost savings made by selecting a model portfolio via a DFM, the adviser will also retain a greater element of control over the client relationship whereas this is lost in a bespoke service that requires direct contact between the Investment Manager and the client. Loss of control is and always has been the number one concern for advisers when it comes to outsourcing. However, selecting a model portfolio actually allows the adviser to retain control by giving them more time to focus on the most high value area of their business; maintaining client relationships.
“With a model solution, compliance also becomes less of a worry because the uniformity and consistency applied to the investment and risk management processes across all portfolios is very much supported and favoured by the FCA. Therefore, we urge those who are unsure of their options at this time to consider whether or not their client portfolios might be better serviced with a cost effective model solution rather than simply defaulting to a more expensive execution only service.”