How a DFM adds value in a volatile world

When stock markets take a tumble, even the most seasoned of investors can suffer from feelings of uncertainty and anxiety. For many, being able to speak to a financial adviser is a real source of comfort.

You only need to look back to spring 2020 to see the importance of expert financial advice in troubling times. Whether it is a fall in income or poor investment performance, clients often need help navigating their changing circumstances, staying focused on the big picture, and understanding that markets will recover given time

Giving clients your full attention

If you’re also responsible for managing investments, devoting additional time to your clients might not always be possible. This is where a discretionary fund manager (DFM), such as Brewin Dolphin, can help. We put all our focus on managing investments, so that you can give your clients your full attention at a time when they most need it.

Even when markets are relatively calm, history shows that things can change on the smallest piece of news. Shares, exchange rates, bond yields and commodity prices can all fluctuate dramatically. Keeping up with events that could impact your clients’ investment portfolios is therefore becoming ever-more difficult and time-consuming.

Outsourcing investment management to a DFM takes away the headache of monitoring clients’ portfolios. You’ll gain access to a team of experts who keep a watchful eye on market movements and, where appropriate, make portfolio adjustments quickly and decisively. Whatever the markets are doing, you can rest assured that your clients’ investments are being looked after in a calm and rational way.

Adviser-client relationship

If you haven’t used a DFM before, you might be wondering how this could affect your relationship with your clients. When you partner with us, you will always own the client and we work for you. We can help you keep your clients informed about market events, but we will never interfere in the adviser-client relationship

For our Managed Portfolio Service, we operate under the ‘agent as client’ model where you, as the adviser, are our client. We essentially manage a ‘virtual portfolio’, in which we have no contact with and no knowledge of the underlying client.

For our Discretionary Fund Management service, we operate under the ‘reliance on others’ model, which allows you, your client and the Brewin Dolphin investment manager to regularly meet and discuss the requirements for the client’s bespoke portfolio.

Understanding the relationship between you and your DFM is important when it comes to your professional indemnity (PI) insurance renewal. PI insurers need enough information to be able to offset the risk of the investment portfolios from the advice that has been provided. Often, insurers don’t receive sufficient information to accurately underwrite risks, but we will work with you to ensure this section of your renewal is filled in as comprehensively as possible.

When share prices are on a rollercoaster ride and clients need extra support, our guidance can help make the PI insurance renewal a more straightforward and stress-free process. Again, enabling you to focus on what really matters: your clients.

Robust and rigorous process

Whatever the markets are doing, with Brewin Dolphin as your DFM you can rest assured that your clients’ investments are in good hands. Our rigorous investment management process also takes away some of the regulatory and compliance burden, thereby freeing up your time to concentrate on your clients’ needs.

For example, our Managed Portfolio Service is geared towards ensuring you can meet the Financial Conduct Authority’s (FCA) standards around both a centralised investment proposition and Treating Customers Fairly Outcome 5 (products that perform as clients are led to expect). We provide a robust, repeatable investment process, will only work with fund managers who are fully transparent, provide monthly rebalancing, are financially sound, and offer detailed factsheets and regular updates.

On the Discretionary Fund Management side, your dedicated Business Development Manager can guide you through the regulatory process of choosing an investment manager for your clients. This includes providing an impartial assessment of our proposition by a leading compliance services provider, a comprehensive due diligence document, and details on how our proposition meets FCA standards.

As an award-winning DFM, who has worked with advisers for more than 25 years, we can help you navigate the complexities of running a successful advice business in a volatile world. Founded in 1762, we have a team of Business Development Managers across the UK, Ireland and the Channel Islands, who can offer hands-on support wherever you may be.

The value of investments, and any income from them, can fall and you may get back less than you invested.
Information is provided only as an example and is not a recommendation to pursue a particular strategy.
Opinions expressed in this publication are not necessarily the views held throughout Brewin Dolphin Ltd.