The report highlighted a growing trend for fund buyers to cancel meetings and fail to turn up to events with asset managers. Even small-venue private round table events.
Tellingly, a common excuse seemed to be something along the lines of “workloads have increased and searching for new ideas is falling further down the priority list”. But does this run counter to the Consumer Duty principal?
What does the FCA expect from advisers? A Consumer Duty recap
One of the key messages from the Financial Conduct Authority (FCA) during the run-up to Consumer Duty was a shift in focus away from “is there any reason to change our whitelist?” to “does our whitelist still reflect the best outcomes for a client?”. It was a subtle re-lensing of the due diligence debate asking the question “is this still the best option in the market; does it still deliver the best client outcomes?” This is a question we are constantly asking ourselves at Charles Stanley and the one that our more than 40 investment professionals ask daily as they research the investment landscape.
That is, do other fund management teams and fund structures now offer a better or even more optimal outcome for client needs? The FCA now expects advisers to audit and report on what they didn’t choose as diligently as they do for their preferred solution.
Consumer Duty brings with it a requirement for increased due diligence across all the available investment options competing in a particular asset class or sub asset class space. It means being on top of emerging trends and issues within the whole of the fund management industry, not just within an asset class.
Could selectors be in danger of finding themselves on the wrong side of an FCA thematic review or deep dive?
The importance of meetings in the due diligence process
As a major private wealth manager, we understand the importance of whites-of-their-eyes meetings in deciding what goes into our guidance portfolios and wider watch lists. Paper- and computer-based research can only tell you so much and take you so far in the selection process. In fact, our research is based on qualitative forward-looking assessments rather than backward-looking screens. As everyone knows, past performance is not a guide to future returns.
We believe in-person research meetings, either face-to-face or virtual, offer several significant advantages that allow a more comprehensive assessment of those responsible for the day-to-day management of your clients’ wealth. This multi-layered, personal understanding provides the essential context needed to make confident, informed choices.
Key benefits
1. Emotional resonance and trust building
Face-to-face interactions enhance trust and rapport: body language, tone of voice, and sincerity are more evident in person, which helps selectors feel confident in having the fund managers as strategic partners.
2. Nuanced questioning and qualitative insights
In-person meetings allow fund selectors to probe beyond performance figures. Asking reflective questions and challenging assumptions yields richer qualitative information on philosophy, strategy, and buy-and-sell decision making.
3. Practical evaluation of processes
Walkthroughs of investment processes, discussions of past mistakes, correction mechanisms, and team dynamics are clearer in person. This aids investment committee reviews and ongoing manager monitoring.
4. Holistic understanding of team dynamics
You can observe how portfolio managers interact during live discussions. Signs of alignment, debate, openness, and collaboration convey whether decisions are team-based or dictated from the top. Is the team truly collegiate or does having a team mask a star picker and the associated key man risk?
5. Support operational and strategic discussions
Beyond performance, face-to-face conversations about operational resilience, service models, vendor relationships, additional services, and ecosystems help build stronger long-term partnerships based on mutually identified or agreed benefits.
How managed portfolio services can provide a Consumer Duty solution
Two years ago, in the months leading up to A-day, we foreshadowed how time-pressed advisers would come under pressure from increased record keeping and reporting requirements. The adviser’s core proposition is built around the relationship with the client, understanding their needs, and designing the most optimal strategies to meet them. And it’s where they add the most value.
Two solutions presented themselves as potential time-gainers: AI reporting and outsourcing.
Outsourcing or, as some intermediary clients reference it, in-sourcing has become an increasing focus in the world of wealth management, and many advisers now understand the benefits of affiliating with a well-known, well-resourced strategic partner. These are summarised below.
Key benefits
- Save time to focus on core activities – every portfolio comes with regulatory, monitoring, and reporting responsibilities. By delegating, you will have more time to focus on the longer-term issues that are important for your clients’ financial health, increase your client base, and grow your business.
- Reduce risk – by ensuring your clients’ investments portfolios are managed efficiently and action is taken in a timely manner, you de-risk your business and your clients’ benefit over the longer term.
- Save costs – firms that specialise in investment management are more efficient and benefit from economies of scale, making it cheaper to outsource to a third-party partner rather than acquire additional staff and resource in-house.
- Competitive advantage – by outsourcing, you can position your firm with more competitive pricing models, helping to attract new clients and increase revenue.
However, outsourcing to a discretionary fund manager still requires strategic planning and ongoing management to make sure it continues to deliver good outcomes for your clients. In case you missed it, in this article we explored how to maximise the opportunity by effectively integrating an MPS solution into your advice practice.
Outsourcing your investments to the right strategic partner carries multiple benefits for advisers. From time and cost efficiency to helping with regulatory responsibilities and reporting. But it should be more than a passive relationship; the best partnerships rely on the investment provider developing a deep understanding of your business and your clients.
To find out more about the Charles Stanley Managed Portfolio Service visit Managed Portfolio Services | Financial Advisers | Charles Stanley or to discuss how we could improve your central investment proposition, contact the team at ist@charles-stanley.co.uk.
Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.
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