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At September’s Avelo Conference, Ashcourt Rowan Asset Manager Mike Kew took part in a panel debate chaired by David Sandman (Editor of New Model Adviser). The subject: how the discretionary fund management business is facing up to the challenges of working with IFAs. Here are his views:
MK: I’d recommend that you position the DFM to the client as an external expert which is being recommended after careful research of the market. This approach shows the IFA’s commitment to providing the best service to their client and in working together with the chosen DFM at the client reviews they can justly demonstrate their “added value”. By operating in this manner the relationship between DFM and IFA is very much a partnership - there is no risk of the IFA losing ownership of the client as they are involved in every step of the process. This is the approach that we take at Ashcourt Rowan – we firmly believe in forming long-lasting relationships with our intermediary partners.
MK: This concern is of just as much importance to the DFM. The build up of goodwill in an IFA business is an important element of the future value of the business and it is of mutual interest to work in partnership in caring for the client. At Ashcourt Rowan our intermediary team are committed to working closely with Financial Planners wherever possible as we can get a full insight into the client’s financial affairs rather than focusing only on the management of their investment portfolio.
Q: What is the panel’s view on the growing use of platforms by IFAs?MK: Some traditional investment managers could argue that platforms can inhibit their ability to build portfolios on a truly bespoke basis as certain assets may not be able to be purchased via platforms. My view is that the platform allows the IFA to show their true independence. It’s like a football referee possessing a red card - an IFA could exert his opinions on the ongoing suitability of a DFM by quickly, efficiently and cost effectively “sending off” a poor performing investment manager and replacing him with another without any of the associated administrative/cost implications of moving from one DFM’s nominee to another.
MK: The investment management industry could satisfy all segments of an IFA’s business through the utilisation of fund of funds, model portfolios and bespoke portfolios. The responsibility of the IFA is to understand a particular investment managers’ style and choose appropriately for his clients. While one investment manager could satisfy the needs of all segments, in reality an IFA would be more likely to choose different investment managers for each segment of his client base.
Attendees of the conference dubbed Mike‘s insight into the DFM world as “enlightening”. Nick Bamford of Informed Choice was extremely positive, commenting “Ashcourt Rowan seem to have a clear understanding of what is required by Financial Intermediaries in terms of an outsourced investment solution customised for the individual business”. Ashcourt Rowan may not yet be the biggest name in the DFM world but when IFAs say that they are the only ones who understand the IFA market, it could pay to watch this space!