Mr Polson told delegates at the IFP Annual Conference 2012 at Celtic Manor, South Wales, on Wednesday (3 Oct) that DFMs needed to bring down charges in order for them to become more accepted.
He said: "It strikes me that model portfolio costs are too much and some people will have to take a haircut."
Mr Polson, an expert on the wrap and platform sector, said that looking at a cross-section of DFM's model portfolios sold through platforms, annual charges ranged from 1.04 per cent at the lower end to 2.21 per cent for higher risk portfolios. Once planner annual charges of one per cent were added on this could mean the end client being charged 3.21 per cent per year for a model portfolio (a pre-selected basket of investments) which was "way too high."
Most Financial Planners are "uncomfortable" with annual fund charges of much over two per cent, he said, so charges needed to come down for DFMs to achieve wider acceptance.

He said he believed that in the longer term DFM model portfolio charges would come down to "five to ten basis points or even nothing at all" and this would be needed if they were to gain widespread acceptance.
Mr Polson's seminar at the conference was called Centralised Investment Propositions, Discretionary Fund Managers and Platforms.
He urged all delegates to read and re-read the FSA's paper FG12/16 which would be pivotal to the development of DFMs on platforms.
He said regulatory change was nudging Financial Planners to move assets to platforms and consider outsourcing investment management so DFMs either offering model portfolios or full DFM services would likely be more used in future.
However, this came with potential pitfalls and planners must be able to provide evidence to support their decisions on issues such as DFM risk comparison and DFM selection. They must avoid "shoehorning" clients into model portfolios which did not suit the client's situations and investment preferences.