4 June 2025
New findings released today show financial advisers overwhelmingly want to see industry-wide standards introduced for due diligence on outsourced investment providers.
Quilter Cheviot, in conjunction with NextWealth, polled 200 financial advice professionals to analyse the views of the community on managed portfolio service (MPS) due diligence.
More than three-quarters (76%) of financial advisers saw the need for consistent standards when reviewing MPS providers, while close to the same amount (71%) believe industry-wide standards are needed to govern the management of outsourced model portfolios to support better client outcomes.
The research highlights a clear gap in financial advisers’ understanding of current regulations relating to outsourced investment providers. While 72% of advisers say they recognise the importance of regulation in assessing these providers, only 57% agree they fully understand the regulatory expectations. Just 9% strongly agree they know what ‘good’ looks like.
The findings come following the announcement by the Financial Conduct Authority that it will soon launch a probe into MPSs, using the Consumer Duty as a lens through which to assess the market.
The data underpins a guide from Quilter Cheviot and NextWealth designed to help advice firms better meet their increasingly detailed obligations around MPS due diligence.
Simon Doherty, head of managed portfolio services at Quilter Cheviot, said: “The Consumer Duty has now had the time to be fully embedded into the culture and process of firms. It has ultimately been a force for good, and it has certainly helped refocus minds onto what good customer outcomes look like. The significance of that has not been lost.
“However, there clearly remains uncertainty amongst financial advisers about what exactly is expected of them when they look to outsource the investment management of their clients’ portfolios. There are a number of participants in that process, including asset managers, data providers and so on. As a result, it perhaps isn’t entirely surprising if advisers are unsure of best practice when making this decision.
“Managed portfolio services have boomed over the past half decade or so, giving advisers choice and flexibility when it comes to their clients’ investments. But with outsourcing comes the need for a more clearly defined framework for financial advisers, both in how they communicate with their client and with the investment manager. It is important investment providers work closely with advisers to help close that gap in regulatory understanding and ensure the market works as well for the end client as it possibly can.”
Julie Best, Insight Director at NextWealth, added: “We are delighted to work with Quilter Cheviot on this guide, designed to help advice firms better meet their increasingly detailed obligations around MPS due diligence. These findings underline a real appetite for clarity among advisers. They aren’t resisting due diligence — they’re asking for a shared understanding of what ‘good’ looks like. There’s a clear need for industry-wide standards to support confident, consistent decision-making and to help firms meet their Consumer Duty obligations.”
