Fraser Donaldson, insight analyst (investments) for Defaqto, shared his thoughts on funds and DFMs in an exclusive interview in the latest issue of Financial Planning Today magazine.
Mr Donaldson revealed the process of investment selection, including risk modelling, selecting investments and managing portfolios.
He said: “Financial Planners and advisers follow a process of getting to know the clients and getting a feel for what their requirements are.
“In the main planners get clients to do an attitude to risk questionnaire, which would come out with a score and the scale can vary considerably.
“You then go back to the client and look at their circumstances.
It may transpire that they don’t need to take that much risk to achieve their goals.
Discussions ensue and then you come out with an answer.”
He added: “There are real-life and real-world issues and decisions that need to be made once you have ascertained the clients investing attitude.
Then you look in the market for suitable investments.
If you’re considering managed portfolio services, most will have their portfolio’s risk rated, then you match the client to the portfolio risk rating.
“It is an end-to-end workflow.”
Revealing the extent of the proliferation of DFMs in recent years, Mr Donaldson said: “Our recent survey results showed that 60% of investment business is now being placed with discretionary managers.”
He added: “There are 22 firms that are only available on a platform and that is a growing
number.
“Whether that is reflected in the assets invested in them I don’t know.
“Most advisers are using DFMs and multi-assets.”
• The full interview with Fraser Donaldson is exclusively in the latest edition of Financial Planning Today magazine.
