Wealth managers and IFAs have differing expectations about investment outsourcing after the retail distribution review (RDR), according to a report by JPMorgan Asset Management.
Over half of wealth managers say advisers will outsource more of their investment business after the RDR is implemented in 2012. Some 30% say outsourcing will “increase significantly”.
But although half of advisers outsource client portfolio management, only 19% of advisers say they will outsource significantly more investment business, while a small number of firms say they will decrease the degree to which they outsource investments.
“Our research suggests these more conservative outsourcing expectations may reflect concerns among IFAs to rationalise their own ongoing charges after the RDR and also worries whether the performance of an outsourced portfolio will justify the cost to clients,” JPMorgan says. (article continues below)
JPMorgan’s research suggests only two-thirds of wealth managers propose to be classified as independent rather than restricted after the RDR, mainly because many wealth managers do not advise on pension or life insurance products.
More than half currently do not meet the requirements needed to be defined as an IFA, while a quarter of firms still need to bring three quarters of their staff or more up to the required qualification standards.