Implemented Portfolios gains aligned-adviser interest

23-Jan-2014

By Krystine Lumanta

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Implemented Portfolios is experiencing increased interest for its outsourced investment management offering from independent-minded financial advisers and principals, according to the company’s managing director.

The best interest test had made it easier for Implemented Portfolios to have discussions with aligned advisers, as it was harder for institutions to impose in-house product, managing director Santi Burridge said.

“We’re still relatively young and into our fourth year now, but we’ve had a significant increase in conversations and interestingly with institutionally-aligned practices that are willing to stand up to their licensee and tell them that the investment piece is important to them,” Burridge told financialobserver.

“It’s something we’re still doing one-by-one, but in-house advisers are now starting to ask that question.”

However, the challenge was that institutions would not openly allow Implemented Portfolios to access their approved product lists, he said.

“So it’s a practice-by-practice conversation and, to be fair, the licensees are doing due diligence on us,” he said.

“The large independent groups are having the same conversations the institutions are having around how they can build margin in their advice chain; we’ve had a fair amount of conversations with them.”

Advisers who were proactive in investment outsourcing conversations were independent-minded and business focused, he said.

“The stock-picker/fund-picker principle is going to be highly threatened by the concept of outsourcing the investment piece,” he said.

“But one of the frustrating things is that advisers, for too long, have been concerned about owning investment advice and owning the discussion around it.

“They haven’t felt necessarily proud of their investment service and primarily it’s because they have no control over that outcome and just hope the fund manager does a good job, but hoping is not the basis of a good business plan.”

A robust investment management approach meant having full control in a philosophy that allowed business owners to concentrate on growing their relationships and building their business, he said.

As the financial services industry evolved with the Future of Financial Advice reforms, stronger independent models where advisers were not being remunerated for transactions or conflict in any form should be encouraged, he said.

“The governance constraints that have been constructed have been built around a conflicted model and a governance regime that is more flexible is something that I’m passionate about,” he said.

“The one-size-fits-all model does not work.”

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