A recent article in Investment Week (you can read it here) reported on a NextWealth report that found more than two-thirds (67%) of financial advisers use a discretionary investment manager (DIM) that is not one of the big names in the industry.
It begs the question, why are the largest DIMs struggling to attract advisers?
As one of the smaller investment managers referenced in the report, I feel well qualified to give my views. Here are three reasons:
- Smaller DIMs offer better access to their investment teams. If you are an adviser using one of the big-name DIMs, it’s unlikely you’ll have a fast track to the top brains on the investment team. I recently heard of an adviser who had £100 million to invest but was unable to get to speak to any of the investment experts at a large DIM.
This is not something that happens within PortfolioMetrix. All our adviser partners have open access to our head of investments, Nic Spicer and his well-qualified team. They know that any queries will be looked at in a timely manner and can be confident they are getting the best of the team’s knowledge and expertise.
- Big DIMs use a segmentation approach. Because of their size and scale, they tend to pigeonhole advisers into groups, such as Assets under advice, which products they use, where they are based etc. This makes providing a service that feels individual and ‘special’ to the adviser (and their clients) difficult. Smaller DIMs are able to provide a much more tailored and personalised service to advisers.
- Lack of differentiation. As one adviser said to me recently, “You could throw a blanket over the top 10 DIMs and you wouldn’t be able to tell one from another” – there is little to differentiate between them apart from their names. They all sell themselves on price and performance so, on that basis, it’s easy to see why advisers feel there is little to separate them.
Smaller DIMs, on the other hand, have to work harder to stand out from the crowd. They are able to innovate more easily and can differentiate using other factors like service levels, technology, thought leadership and efficiency gains. At least, that’s how it is with us.
If you are an adviser, I’d love to know your views on this. Do you disagree with my views on the large DIMs? What do you like best about the DIM you use? How would you like to see DIMs differentiate vs their peers? Please get in touch via engagement@portfoliometrix.co.uk.
