Financial advisers continue to be sceptical of using multiple model portfolios on DFMs due to lack of transparency and information on fund holdings, a new survey suggests.
FE has surveyed 186 UK advisers finding that more than a half only use a single model portfolio service provider because the lack of transparency and sufficient holdings information made comparing multiple providers “difficult” and “extremely time-consuming”.
Only 35 per cent of the advisers surveyed use between two and four model portfolio service providers, while only 13 per cent used model portfolio options from more than five providers, FE finds.
FE director Mika-John Southworth says “there is still more to be done” in the DFM space and also in the wider industry where between 10 per cent and 14 per cent of unit trusts and OEICs still don’t report an OCF or TER on FE.
Southworth says: “The DFM industry remains open to criticism about its opaqueness, although there is a growing recognition amongst the most customer facing DFMs regarding the need for greater transparency.
“The launch of our campaign based around DFM data in FE Analytics last year, has started to close the gap, but there is much more that needs to be done, and there is a need for more urgency – ultimately it is the end consumer who is going to suffer otherwise.”