Advisers are primarily using multi-asset/multi-manager funds as a one-stop shop solution for less wealthy clients. That’s according to the latest Platforum research – UK Fund Distribution: Multi-Asset and Multi-Manager. We found that 69% of advisers identified the typical client for such funds as having less than £100,000 in investible assets.
Some advisers would like to use model portfolios across the board, but say the cost and effort of re-balancing for less wealthy clients makes a multi-asset/multi-manager fund approach more appropriate.
Of advisers using multi-asset/multi-manager funds:
- Most typically recommend no more than three funds per client, a third recommend just one.
- Most use them as either standalone investment solutions or as portfolio building blocks.
- Very few are creating entire portfolios from them.
Some advisers use these funds as part of a bucketing or a core/satellite approach to managing income and growth in decumulation. This is where the client holds a cash deposit ‘bucket’ for immediate spending needs, a cautiously invested medium-term ‘bucket’ and a more adventurously invested third bucket to meet long-term needs. In this scenario, a multi-asset fund is often used for the cautiously invested core ‘bucket’.
Strong retail flows into multi-asset and multi-manager funds continued in 2017 and the popularity among financial advisers remains high. These products are rated as the most likely to be recommended, albeit for a more focused client profile than most other funds. We do, however, expect to see advisers shifting client assets away from multi-manager to multi-asset funds in 2018, capitalising on lower charges for broader exposure and diversification.
This is one of the many investment distribution topics that will be discussed at Platforum ID – The Investment Distribution Conference on 4th July 2018. This is the only conference run by distribution experts for distribution experts and replaces the annual conference that we have previously run in the autumn. We will run a new event, Platforum for Advisers, on 10th October 2018.