One-quarter of financial advisers have seen a pay rise greater than 10% after adopting the use of a discretionary fund manager (DFM), research for Rathbones undertaken by CoreData has suggested.
Rathbones’ Value of discretionary fund management report, which is based on a study of 100 financial advisers, found one-in-eight (12%) advisers saw a pay rise of more than 20% after outsourcing their investments to a DFM. Some 6% saw a reported rise of 15% to 19% after adopting a DFM approach, while 8% saw a reported rise of 11% to 14%.
The research also found firms that used DFMs had 14% more clients per adviser than those that did not, while advice businesses that used discretionary services were on average double the size of their counterparts that used an in-house approach.
Revenues per adviser were also found to be higher in firms that used DFMs – £220,716 per adviser versus £186,606.
For those not using a DFM, close to three-quarters said they did not use one because costs were too great, while others believed they would struggle to justify the cost of their advice if they outsourced their investment management.
Rathbone Unit Trust Management chief executive Mike Webb said: “We hoped to shine a light on the drivers of the shift to DFM and the impact it can have on advisers, and the results have revealed some striking differences between the ‘users’ and ‘non-users’.
“This report can provide the information needed to further improve the offering for advisers by focusing efforts on areas such as performance, value for money, transparency and tailoring investment solutions for more specific client needs.”
Published 4 October 2018
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