Building an efficient investment process

There are a range of powerful commercial considerations that have made outsourcing portfolio management the best way for advisers to deal with the today’s dynamic regulatory environment as Andy Miller, Lead Investment Director, explains.

Creating and managing an efficient in-house investment process has always been challenging, thanks to the uncertain economic backdrop, and the ever-evolving needs of your clients. However, the introduction of the Consumer Duty, and it's requirement to demonstrate that services meet the needs of each of your clients, deliver the right outcome, and provide value, has made running advisory portfolios even tougher. As a result, the level of expertise, time, and resources required to manage portfolios now far exceeds what was required previously.

The silver lining

Some advisers will, of course, have the resources and in-house expertise for this, but for many others, this simply isn’t possible. The silver lining is that outsourcing the day-to-day investment management of your client portfolios can alleviate the mounting regulatory strain on your business and free-up your time and resources. This helps ensure your clients receive ongoing advice that’s appropriate to their needs, cost-effective, and sustainable. This improves profitability and can help drive positive client outcomes for your clients.

A broader and more valued advice service

The prospect of outsourcing your investment process may be a concern for you – especially if portfolio management was previously highlighted as a value-add service to your clients. You may be delegating your investment management process – but you are not delegating your responsibility to your clients. In fact, outsourcing creates greater opportunities to enhance the service you offer.

These can include holistic tax planning, behavioural coaching, and, of course, the work involved in reviewing existing goals, setting new ones, or using cashflow modelling tools to illustrate the journey.

Aligning interests

When done properly, outsourcing your investment process can be seen as a natural extension of your firm’s advice service. It allows you to focus on aligning solutions with your clients’ needs and helping them achieve their financial goals.

Outsourcing also enables your clients to benefit from an enhanced investment process. Whether that’s better research capabilities, a wider range of investment options and asset classes, more developed responsible and sustainable investment options, or the attraction of tapping into a more robust due diligence process. Additionally, some of the requirements under the Consumer Duty, such as assessment of value, will be done for you.

All these elements ultimately help to deliver better outcomes for your clients, and rigorously demonstrate your approach to doing so. Also, where outsourcing proves its worth is in reducing regulatory risks, reducing costs, and increasing profitability.

For you and your clients, there’s never been a more appropriate time to partner with the right investment manager to manage your firm’s investment process.

Past performance is not a guide to future performance and may not be repeated. Investment involves risk. The value of investments may go down as well as up and investors may not get back the amount originally invested.