• 82% of intermediaries have a centralised investment
• 76% use model portfolios
A survey from Equifax Touchstone, a market leading intermediary
database provider, shows that 82% of intermediaries have a centralised
investment process and 76% use model portfolios, illustrating the
enhanced focus on delivering consistent investment outcomes to end
investors. Where intermediaries use model portfolios, 70% do so for
more than 50% of their investment business.
The findings show that although the adoption of centralised
investment processes and model portfolios is now common practice,
implementation varies with the size of the firm. Only 66% of advisers
in a firm with less than five advisers use model portfolios in
contrast to 83% from firms with over 50 advisers.
While some investors are increasingly turning to passive
investments to reduce costs, the survey shows that advisers still very
much value active investment vehicles. Passive investing plays a part
for 82% of intermediaries, but the majority invest 25% or less of
their investment business in passives. Only 11% of advisers allocate
more than 50% to passive funds.
John Driscoll, Director at Equifax Touchstone, said:
“Centralised processes and the use of model portfolios ensure that a
client’s attitude to risk is reflected and maintained on an ongoing
basis, as these portfolios are managed according to strict risk
criteria, and re-balanced regularly.
“We’re witnessing a shift to a more structured investment
process, with centralised processes a key foundation for investment
advice. This approach helps strike the right balance between risk and
return, particularly important in a world of increased market volatility.
“The FCA is very focused on the quality of advice that
investors receive, and stamping out unsuitable advice is a priority.
Being able to demonstrate that investment risk is managed, monitored
and maintained to the appropriate level for the client is an important
part of this. With the rebalancing and documented investment process
at the heart of investment advice, investors can access a more
consistent approach to investment.”
Equifax Touchstone utilises intermediary and customer profiling
tools to provide financial services providers with a detailed
understanding of their marketplace and client base.
Total sample size was 141 investment advisers. The survey was
carried out online in August 2017.