How outsourcing investment expertise can propel your business ahead

The role and remit of advisers have evolved over the years. Successfully managing investments in today's complex markets is tougher than ever, meeting the regulatory requirements and client demands, and handling risks all require additional expertise and resources.

Outsourcing the management of your investment portfolios to a Discretionary Fund Manager (DFM) or Managed Portfolios Services (MPS) can:

• Make your business more profitable,
• de-risk your business and,
• deliver significant benefits to your clients, including positive investment returns.

By outsourcing to a DFM/MPS provider, it allows your firm to leverage specialised investment expertise and resources, ensuring high-quality, personalised solutions for your clients. This partnership not only enhances the efficiency of managing investments, but also frees up valuable time for you to focus on core activities and long-term client relationships. By tapping into Charles Stanley’s extensive research and market insights, advisers can offer competitive pricing models and attract new clients, ultimately driving business growth.

There are also the de-risking benefits. Outsourcing will help advisers navigate the complex regulatory landscape with ease. With increased responsibilities under MiFID II and the new Consumer Duty rules, DFMs provide the necessary compliance support, reducing both costs and risks. This ensures that your firm can meet the regulatory obligations without the administrative burden, allowing you to deliver optimal investment outcomes and maintain client trust.

Growing regulatory pressures on advisers

Since MiFID II, firms now have a greater responsibility to ensure they are meeting and reporting on the set of standards laid out by the regulator. One of the main challenges facing advisers is managing their own portfolio models and the requirement to receive authorisation from the client invested in the portfolio for any changes, for example rebalancing and fund switches. However, in addition the suitability assessment is required (within COBS) when advisers are making a personal recommendation to hold an investment as well as buying or selling.

“Firms should undertake a suitability assessment not only when making a personal recommendation to buy a financial instrument or an insurance-based investment product but for all decisions whether to trade, including making any personal recommendations about whether or not to buy, hold or sell an investment.” - COBS 9A.2.2.

By minimising the risk of suboptimal client outcomes due to multiple clients using various model versions under advisory permissions, outsourcing investment services ensures that investment expertise and oversight are well maintained without needing these capabilities within the adviser firm, thereby significantly reducing both costs and risks. Additionally, it streamlines administrative processes, eliminating the need for firms to obtain client signatures or permissions for model changes or to justify these changes. This is often a timely process, which can sometimes lead to missed investment opportunities.

While obtaining discretionary permissions can simplify some aspects of central investment proposition administration by removing the need for individual authorisations for portfolio changes, outsourcing to an asset manager gives you access to their expert research teams and resources who spend hours searching for the best opportunities in the market, in-line with the mandate agreed with the adviser.

Further still, the FCA’s new Consumer Duty rules mark a big change in the way financial services are regulated. They place a strong emphasis on prioritising the needs of customers and demand a cultural shift in the way financial advisers operate.

By outsourcing your investment services you will be able to easily meet your regulatory obligations and compliance expected, along with any new responsibilities on you and your firm. It’s estimated that costs added by Consumer Duty could rise significantly, with 92% of advisers saying running costs for their business will rise, With the support that comes with a larger network, you can better consider how to meet regulatory requirements in the design and delivery of your services, reducing both risks and costs.

The benefits of working with an external partner

Trusting an external investment business to manage your clients’ portfolios is a big decision but it can deliver significant benefits to you and your team, such as:

• Save time to focus on core activities – every portfolio comes with regulatory, monitoring and reporting responsibilities. By delegating, you will have more time to focus on the longer-term issues that are important for your clients’ financial health, increase your client base and grow your business.
• Reduced risk – by ensuring your clients’ investments portfolios are managed efficiently and action is taken in a timely manner, you de-risk your business and your clients’ benefit over the longer term.
• Cost savings – firms that specialise in financial planning are likely to carry out some activities more efficiently and benefit from economies of scale, making it cheaper to outsource to a third-party partner rather than acquire additional staff and resource in-house.
• Competitive advantage – by outsourcing, you can position the firm with more competitive pricing models, helping to attract new clients and increase revenue.

Partnering with Charles Stanley

We have a long history of working with financial advisers who value our investment expertise and service excellence. It is our priority to give you all of the information and evidence you need so you can recommend Charles Stanley to your clients with complete confidence.

To discover how our Managed Portfolio Services can enhance your clients’ investment journey, reach out to us today. Let's navigate the nuances together and pave the way for a more diversified portfolio suited to you and your clients’ needs.

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