Model portfolio services achieve the same goals as bespoke discretionary management but at a lower cost, according to Justine Randall, chief commercial officer at Tatton Investment Management.
In a debate on MPS versus bespoke discretionary management, Randall argued MPS is a “force of nature” and said there were three key factors driving growth and demand for the service.
“Firstly, we know this all too well about price pressure, pressure on value chains and whether you are an IFA or a platform, MPS solutions stands very clear on monetary savings when compared to traditional bespoke offerings.
“Secondly, regulatory burden is causing us more pain, driving more advisers to outsourced solutions. Then finally there is ease of trade - MPS can be accessed across platforms,” she added.
Randall also argued MPS offers reduced risk and complexity for advisers and their clients.
She said: “It’s hard being an adviser in today’s landscape and outsourcing to MPS allows advisers to focus on client needs and allows us to focus on the investment management. This client-centric approach allows adviser to spend more time with their clients and have the utmost confidence we will focus on investment returns at the right price.”
Randall believed MPS supports advice business models through platform-based investment management.
“MPS provides a combination of price, performance and service meaning our team is an extension of your team here to celebrate advisers not compete with them.
“Advisers are our whole universe and MPS is indeed the future and will continue to thrive because, quite simply, it is designed by advisers for advisers.”
Not for complex needs
On the other hand, Sean Osborne, group head of sales at Charles Stanley argued MPS does not cater to all clients particularly those who require more of a tailored service and have more complex needs.
“While I believe MPS does have its merits, it’s not going to take all of the money currently managed by bespoke solutions.
“I took part in some research to look at what customers really value. Clients were asked what they value most from their relationship with advisers and peace of mind was the top response, access to someone human came second.
“Some clients do want to make money but some also want to preserve it and want help to restructure their affairs for example when it comes to intergenerational planning,” he added.
Osborne said some clients see value as a personalised and tailored service because everyone has different needs and desires.
He said: “I don’t believe a one size fits all model portfolio service suits every client just because on the face of it , it might be cheaper.”
Osborne said reasons advisers are outsourcing to firms like Charles Stanley include driving efficiency through their business, wanting to spend more time with clients and providing advice and plans.
“I also know many advisers who have been managing their own portfolios and then made the decision to outsource to do a better job than they do themselves because we are the specialists.”
