When looking for an outsourced partner, there are a broad range of factors to consider. These will depend on the nature of your business and your clients. Here are some suggestions:
1. Longevity in the market - This is both backward and forward looking. What is the partner's experience in the investment market and is there evidence they will be around for the long term?
2. Range of solutions - Some advisers look for partners providing a full range of options e.g. bespoke portfolios, models on third party platforms and multi-asset funds. A range of risk profiles and variety of styles e.g. active, passive and sustainable might also be required.
3. Investment expertise - How is research undertaken? How are asset allocation decisions made? What is the investment process? What risk controls and governance processes are in place?
4. Performance - Whilst not a guarantee of future returns, what does the performance record look like and in particular are there any periods of prolonged, unexplained poor performance?
5. Support and communication - This is vital! Do the adviser and client meet the person who is actually managing bespoke portfolios and how often? How are regular updates and changes reported?
The financial adviser is typically responsible for client communication for model portfolios on platforms so do they receive timely and relevant communication to support client conversations?
6. Suitability - Responsibility for this may vary for bespoke portfolios. Advisers should look closely at contracts with their outsourcing partner and agree where responsibilities lie.
7. Cost and value - Charges are always important but should be compared based on the value delivered to both the client and adviser.
8. Additional services - Many outsourced partners offer additional services such as offshore portfolios, tax and trust services, AIM portfolios, charities and investments for overseas clients. An adviser may need to consider if any of these are required for their clients.
9. Service quality - If the adviser has a problem, who do they contact, how quickly can any problems be resolved and what are the service level agreements?
10. Culture - A good working relationship with an outsourced partner is important and the culture of their organisation should be considered. Difficult to quantify and measure, this is about alignment of values. Reviewing business processes and meeting the people can help here and synergy of culture goes a long way to guarantee a successful long-term partnership aligned to deliver client outcomes.
Gillian Hepburn, Intermediary Solutions Director, Schroders
Important information
Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Schroders has expressed its own views and opinions which may change.
This information is not an offer, solicitation or recommendation to buy or sell any financial instrument or to adopt any investment strategy. Nothing in this material should be construed as advice or a recommendation to buy or sell. Reliance should not be placed on any views or information in the material when taking individual investment and/or strategic decisions. No responsibility can be accepted for error of fact or opinion. Issued in November 2019 by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU, registered No. 1893220, who is authorised and regulated by the Financial Conduct Authority.
