Defaqto’s DFM Satisfaction Study 2024 measured how satisfied advisers were with their preferred providers and identified where expectations are being met.

Fraser Donaldson, investment consultant at Defaqto, said: “The worst performing categories were online facilities, provider brand, quality of literature and remuneration.” 

Quality of literature showed the biggest fall in satisfaction, which reflected the introduction of the Consumer Duty regulation and the need for clear and transparent communication.

Mr Donaldson said: “The FCA is focusing heavily on this regulation and, if advisers feel that the support they are getting is not sufficient to comply with the Consumer Duty, then it is inevitable that they will start to look elsewhere if things do not improve.”

According to the study, Rathbone Investment Management was advisers’ preferred provider for bespoke DFM, while Tatton Investment Management was the preferred provider for managed portfolio service (MPS) via a platform and for direct custody solutions.

Overall, Tatton Investment Management was also the most recommended DFM provider, followed by Brooks Macdonald and Waverton Investment Management.

In total, 18 bespoke DFM providers received sufficient adviser nominations as preferred providers to be awarded a Defaqto service rating.

Based on rounded scores, the top 5 preferred providers for MPS via a platform, in order, were:

1. Tatton Investment Management
2. Waverton Investment Management
3. RBC Brewin Dolphin
4. AJ Bell
5. LGT Wealth Management

 Based on rounded scores, the top 5 preferred providers for MPS direct, in order, were:

1. Tatton Investment Management
2. Waverton Investment Management
3. Rathbone Investment Management
4. Quilter
5. RBC Brewin Dolphin

Based on rounded scores, the top 5 preferred providers for bespoke DFM, in order, were:

1. Rathbone Investment Management
2. Brooks Macdonald
3. Investec Wealth & Investment
4. RBC Brewin Dolphin
5. Quilter Cheviot

The study also revealed the average DFM portfolio size for all three discretionary types continued to increase. The average size for managed portfolio services through a platform was £284,000, managed portfolio service direct custody DFM was £277,000, and bespoke service averaged £627,000.

According to the study, over two-thirds of advisers accessed an MPS via an adviser platform. Just over half used MPS direct and just under half utilised the bespoke service.

Of those advisers that made use of a bespoke investment service for their clients, 86% also used an MPS, up from 75% in the previous year, underlining the growing popularity of MPS solutions. 

Based on the weighted satisfaction indices for each provider, the study identified the top performers in each of the 14 categories of service. Rockhold attained the largest number of top performing categories (12 out of 14), closely followed by Schroder & Co (10) and Albemarle (9).

• The survey was conducted among 274 advisers in August and September of last year.