Quilter Cheviot has seen a rise in popularity over the last year, with the firm named the most used and most preferred discretionary fund manager (DFM) by advisers according to the latest Defaqto DFM Service Review, although the report also suggested the dominance of the largest players in the market was starting to level out.
The firm conducted its third annual DFM review last year and surveyed 372 advisers for the report.
It found the most popular DFM was Quilter Cheviot, up from second place in 2016, followed by Brewin Dolphin in second and last year's top spot Investec Wealth & Investment in third. It was the same ranking list for the most preferred DFM for bespoke services.
On average, advisers were using 2.5 DFMs each, which is similar to the previous year.
There was also a boost for firms including Rowan Dartington, Walker Crips, Hawksmoor and Cazenove Capital, which were being used by significantly more advisers than last year.
The report said: "[There are] a handful of dominant firms, with a very long tail. If anything, the tail is getting longer and the dominance of the largest firms is perhaps levelling out.
"Advisers, as they have become more knowledgeable about the market, are perhaps looking a little further afield than the obvious, if only as secondary and tertiary choices."
Although Investec Wealth & Investment remained in the top three for both adviser use and preference - it fell from 27% last year to 17% in terms of adviser use and from 21% to 14% for adviser preference.
However, when advisers were surveyed about their use of managed portfolio services, the results were more varied with Quilter Cheviot jointly in the top spot with Parmenion followed by Brooks Macdonald.
There was also a significant number of smaller ‘other' firms, with more than 10% of advisers opting for one of these groups instead..
Looking at how advisers select a DFM, the most important factor was having a range of assets, followed by quality of the investment staff and having a range of portfolio options.
It was a particularly large jump for the range of assets criterion (able to hold funds/stocks/investment trusts), which was hailed as the most important factor as it moved up from seventh place in 2016.
The report said: "There has been a significant focus by the FCA on the types of assets being used in client portfolios ever since the publication of the FCA's interim Asset Management Market Study.
"In particular, there was a concern that passive investments were perhaps not being used as often as they should be.
"This sudden increase in importance of the range of assets used in portfolios could be a reflection of this."
Firms namechecked as having a strong range of assets and/or options included Brooks Macdonald, Cazenove Capital, LGT Vestra, Parmenion and Old Mutual Wealth.
In addition, those highlighted for quality investment staff included Brewin Dolphin, Brooks Macdonald, Quilter Cheviot and Investec Wealth & Investment.
However, there was a 7% drop in overall satisfaction with the quality of existing staff between 2016 and 2017, indicating this is an area that requires work.
"Advisers are exercising their judgement in selecting discretionary firms to manage their clients' money.
"It is important that advisers are kept informed of progress, strategy and reasoning behind any decision making so they are in a position to advise their clients of any required action or placate them in times of volatility," the report said.
"The quality of investment staff at the DFM firm is integral to getting across the right messages. If this is beginning to break down, advisers will start to consider if outsourcing to the firm in question is harming their own adviser/client relationship."
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