Survey conducted among 274 advisers in August and September of last year found that:
- Rathbone Investment Management is advisers’ preferred provider for bespoke DFM, whilst Tatton Investment Management is preferred provider for MPS via a platform and for MPS direct custody solutions
- Overall, Tatton Investment Management is also the most recommended DFM provider, followed by Brooks Macdonald and Waverton Investment Management
- Fewer than a third of advisers felt fully supported by their preferred DFM on Consumer Duty
Defaqto’s newly released annual DFM Satisfaction Study 2024 has found that Tatton Investment Management is the most recommended DFM provider for advisers, followed by Brooks Macdonald and Waverton Investment Management.
The annual survey conducted by Defaqto, the financial information, ratings and fintech business, measures how satisfied financial advisers are with their preferred providers and identifies where expectations are being met.
Tatton further dominates as preferred provider for MPS
Alongside being the most recommended provider overall, Tatton Investment Management also topped Defaqto’s list of preferred providers for two of the three types.
Tatton Investment Management is the preferred provider for MPS via a platform and for MPS direct custody, based on the greatest number of top three preference positions. Whilst advisers’ preferred provider for bespoke DFM is Rathbone Investment Management.
In total, 18 bespoke DFM providers received sufficient adviser nominations as preferred providers to be awarded a Defaqto service rating. As did, 17 MPS via a platform and 17 MPS direct.
Based on rounded scores, the top 5 preferred providers for MPS via a platform, in order, were:
- Tatton Investment Management
- Waverton Investment Management
- RBC Brewin Dolphin
- AJ Bell
- LGT Wealth Management
Based on rounded scores, the top 5 preferred providers for MPS direct, in order, were:
- Tatton Investment Management
- Waverton Investment Management
- Rathbone Investment Management
- Quilter
- RBC Brewin Dolphin
Based on rounded scores, the top 5 preferred providers for bespoke DFM, in order, were:
- Rathbone Investment Management
- Brooks Macdonald
- Investec Wealth & Investment
- RBC Brewin Dolphin
- Quilter Cheviot
This year’s study also revealed the average DFM portfolio size for all three discretionary types has continued to increase. The average size for managed portfolio services through a platform being £284,000, managed portfolio service direct custody DFM being £277,000, and Bespoke service averaging £627,000.
Growing popularity of MPS solutions
According to the study, over two-thirds of advisers access an MPS via an adviser platform. Just over half use MPS direct and just under half utilise the bespoke service. Of those advisers that do make use of a bespoke investment service for their clients, 86% also use an MPS. This is up from 75% last year, underlining the growing popularity of MPS solutions.
For bespoke investment service users that do not use an MPS (14%), it is likely that most will be using multi-asset funds or constructing portfolios, on an advisory basis, with single asset funds for clients where a bespoke investment proposition is not suitable. Advisory business placed using single asset funds continued to shrink though, falling from 11% in 2019 to just 4% in 2023.
Adviser expectations and satisfaction
The study also measured how satisfied advisers have been with their preferred providers and identified where expectations are being met by cross-matching ranked importance with ranked satisfaction over the 14 categories. Service is the category ranked most important for advisers, switching places with Quality of staff – investment which ranked first in last year’s study.
Based on the weighted satisfaction indices for each provider, Defaqto’s latest DFM Satisfaction 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).
Fraser Donaldson, Investment Consultant at Defaqto, said: “Whilst many categories received similar satisfaction scores to last year, the worst performing categories were Online facilities, Provider brand, Quality of literature, and Remuneration, which saw an average drop in satisfaction scores of two percentage points.
“Quality of literature showed the biggest fall in satisfaction among advisers, which isn’t surprising considering the introduction of The Consumer Duty Regulation and the need for clear and transparent communication. Broadly speaking, fewer than a third of advisers felt fully supported by their preferred DFM during this transition and the quality of literature is likely to be a contributing factor.
“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.”
The full DFM Satisfaction Study 2024 can be found at https://www.defaqto.com/resources/2024-dfm-satisfaction-study
