Are you sitting (too) comfortably?

As I look out on a snowy landscape, delivered courtesy of the ‘beast from the east’, I’m extremely grateful to be cosy and warm inside.

Feeling cosy is just what you want when the weather turns inclement but I would argue it’s not a feeling to be revelled in when it comes to business.

Yet, according to a recent survey by Money Marketing magazine among 400 advisers and paraplanners, feeling cosy is exactly how many feel when it comes to their relationship with a discretionary fund manager (DFM).

Several survey respondents revealed that their relationship with their DFMs spanned 20 years and ‘service levels’ plus ‘ease of relationship’ ranked just behind ‘performance’ in the top factors the respondents said they are looking for. According to the article, one survey respondent remarked that their long-standing relationship with their DFM meant they trusted their “very good experience of outcomes in all market circumstances”.

All well and good but is all this bonhomie as good for the end clients as it is for the advisers?

As the article highlights, the top factor for advisers is performance yet it’s recognised that comparing performance is extremely difficult. So, it could be argued that unless the performance is clearly woeful, many advisers may be just sticking with the providers they know and feel comfortable with rather than looking around to see if they could do better for their clients.

If this is the case, it’s hard to blame them. The industry needs to come up with a better way of comparing performance and giving advisers a fighting chance of deciding whether it’s actually worth going through the effort of making a change. We have our own way of doing this at PortfolioMetrix and we’ll be sharing those thoughts shortly but what is really needed is a recognised industry standard that gets rid of the smoke and mirrors environment that currently exists.