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Why outsourcing your investment management needs on platform could be a game changer

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The ability for advisers to deliver personalised client outcomes with their chosen investment proposition on platform is now within reach.

For any adviser firm, regulatory pressures and the overheads of managing in-house model portfolios on platform can be a constant concern.

Moreover, fitting all clients within those model portfolios, while achieving more individual outcomes can also be a worry.

As a way of solving this dilemma, advisers traditionally go ‘off platform’ and engage the services of a DFM in order to offer clients a more bespoke portfolio to reflect individual investment preferences.

However there are a couple of downsides to this approach. DFM services involve a high level of manual intervention, so bespoke investment management is out of reach for most clients as it’s far more expensive than typical model solutions on platform. In addition, introducing a portfolio manager can potentially disrupt the adviser / client relationship and the client may question the role of the adviser.

Technology that could be a game change for your firm

So the idea of outsourcing the investment management requirements of a model portfolio, but with individual client outcomes controlled on platform, could be a game changer for many adviser firms.

And thanks to next-generation platform technology, adviser firms now have the option of managing a consistent in-house investment proposition on platform.

The technology, called Individually Managed Accounts (IMA), provides cost-effective, automated customisation of investment propositions in a streamlined way for better client outcomes.

It’s clients who will ultimately benefit

IMA enables advisers, working in agreement with DFMs, to deliver more individual client solutions and at scale. The adviser can manage the client administration side on platform, executing client specific instructions, agreed CGT strategies and tax allowance usage without the need for time-consuming manual intervention.

As part of the relationship between the adviser and the DFM, the DFM works in line with the firm’s model portfolio strategy with feeds of data being fed back and forth.

Facilitated by the investment Hub on Wrap, advisers can see the performance and value of the portfolio and carry out the client management required but the DFM cannot access that part of the platform.

Although the technology can add value to an adviser firm as the entire client proposition is managed on platform which helps make the firm more efficient, it’s the client who ultimately benefits with better outcomes at potentially less cost.

And although IMA introduces the responsibilities of a portfolio manager within the investment proposition, the technology does not replace bespoke DFM solutions. There’s still very much a place for them. However, for those clients who want more than a model portfolio proposition, but who don’t need the full fanfare of a DFM service, then IMA, with its light touch approach, is especially well suited.

IMA highlights the evolution of platform technology

IMA highlights the evolution of platform technology

The future for client-led investment solutions

IMA takes the benefits of model portfolios and the benefits of bespoke portfolios and allows advisers to manage their investment propositions with the consistency and control that a platform provides, while offering the individual client outcomes they are looking for.

It’s the evolution of platform technology that meets the needs of both advisers and investment managers, adding efficiencies and allowing them to work together in harmony. It also offers interesting opportunities for DFMs to widen their proposition or flex their business model.

IMA is the future for client-led investment solutions, reducing the cost and risk burden on adviser firms.

Speak to your usual Standard Life contact for more details on how next-generation technology on Standard Life’s Wrap platform can help you deliver individual solutions for your clients, or  see our Individually Managed Accounts page.

The value of investments can go down as well as up, and could be worth less than originally invested.

The views expressed in this blog should not be regarded as financial advice.