Together with model portfolios, which 36% of advisers’ report to predominantly use with clients, the two favoured investment strategies are now collectively the most popular for almost three quarters (72%) of advisers’ investment strategies. Use of model portfolios is, however, down from 41% in 2016. The remaining 28% of the advisers who took part said they mainly used single-strategy funds (12%), stockpicking (9%) or Discretionary Fund Managers (DFMs) (8%).
Model portfolios remain popular with advisers, as they facilitate bespoke investment propositions that clients can’t find anywhere else. However, there are signs that the governance responsibilities, cost of investment research, plus the administration involved in gaining client consent for any changes, is driving some advisers toward the multi-asset route.
Nick Dixon, Investment Director at Aegon, said: “We’ve seen a rise in the popularity of multi-asset funds, as advisers face up to greater cost and regulatory pressures, and look to simplify investment administration processes. While some who have large numbers of high-value clients are looking to gain discretionary fund manager permissions, others see multi-asset funds as a cost-effective way of addressing mainstream investment needs.
“However, model portfolios remain the dominant way of building investment strategies, and we expect this to continue for some time to come. This is partly why we have invested so heavily in the online model portfolio functionality used by advisers on our Aegon Retirement Choices platform. Model portfolios aren’t going anywhere soon. Advisers are, and will continue to, find appetite amongst clients for their uniquely tailored portfolios.”
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