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Fewer adviser firms seeking discretionary permissions

13 August 2018

The number of advisers seeking discretionary permissions is falling, according to Nucleus’ latest adviser survey. 

The wrap platform said just one in 10 advisers planned to hold discretionary permissions this year, down from one in five respondents in 2016.

Meanwhile, for Nucleus users, in-house model portfolios continue to prove most popular for client investments. Nearly half (45%) of all users with in-house model portfolios said they will allocate over 80% of clients’ money into this solution, up from 34% in 2017.

Barry Neilson, chief customer officer at Nucleus, said: “There has been continued rumblings in the market that adviser applications for discretionary permissions were on the up, so it is perhaps surprising to find our users supposedly buck that trend. With so many advisers still building their own in-house model portfolios, it is important they realise the administrative burden this can have if they operate those on an advisory basis.”

The survey also found that discretionary fund managers continue to polarize opinion, with 22% of advisers who use them expecting to increase their usage over the next year and only 6% expecting to do the opposite. However, over the longer term, 43% of users said they would not use a DFM, while the same level said they will begin or increase their use of a DFM, while just 14% stated they would decrease or stop using.

Neilson added: “Whether an adviser is using a discretionary investment manager or has its own permissions, they need to ensure that the necessary due diligence is carried out, and that the operational processes are robust, consistent and provide the customer with the best service and outcomes as possible. Advisers risk tarnishing the reputations they have built up over a long period of time if they underestimate or don’t implement either process carefully and effectively.”


Professional Paraplanner