More and more advisers are outsourcing their client investment portfolios via multi-managers and this number is expected to rise in the run-up to the RDR.
Some 23 per cent of platform users outsourced to a multi-manager in 2010 and the volume of assets has increased by 600 per cent in the last decade.
In 2001 only £11bn of assets were outsourced compared to £63.5bn in 2011.
Defaqto says that while many advisers have been targeted by the discretionary management industry, the multi-manager approach is still complementary to it.
The benefits of outsourcing include allowing advisers to free up resources for developing client relationships, gaining access to past performance data of fund managers and retaining control of asset allocation in the investment process.
However it is vital for advisers to conduct due diligence before agreeing to any outsourcing.
Fraser Donaldson, Defaqto’s insight analyst for funds, said: “Given the sheer size of the multi-manager industry and pace of change we are seeing, advisers looking to outsource through this channel need to undertake a robust due diligence process to ensure they select appropriate investment partners for their business and their clients.”
The ‘Defaqto guide to multi-managers’ offers advice on selecting a multi-manager and a breakdown of each fund by IMA sector showing how they employ risk.
The guide can be downloaded for free at www.defaqto.com/adviser/ifa/guides