24 February 2025
Outsourced investments have soared on the Quilter platform this decade, according to new data, as adviser appetite to run their own portfolios has waned significantly.
At the end of 2020, outsourced investments in DFM models and managed portfolio services stood at 16.7% of all platform assets. Today that figure stands at 41.9%, with the total amount of assets in these soaring 331% over the same period. Indeed, the degree of outsourcing is also likely to be far greater once multi-asset funds are considered too (these fall into the ‘other’ category in the table below).
In contrast, the proportion of assets still managed on an advisory basis on the Quilter platform has fallen sharply – standing at 28.1% in 2020 compared to 15.8% today. Indeed, the total assets run on an advisory basis has stagnated in comparison to outsourced assets, with just £13.4bn today compared to £13.9bn in 2020.
The managed portfolio service market has grown exponentially in recent years, as fees have reduced at a similar time as advisers have lost appetite to run advisory portfolios, particularly following the struggles of fixed income in 2022.
Next Wealth recently found discretionary MPS assets grew 36% in the year to 30 September 2024, aided by favourable markets, deepening existing relationships and broadening to new firms.
|
Date |
Adviser Models |
DFM Models |
MPS Model |
Other |
|
31/12/2020 |
£13.9bn |
£2.1bn |
£6.2bn |
£27.4bn |
|
31/12/2021 |
£18.6bn |
£6.0bn |
£9.6bn |
£39.0bn |
|
31/12/2022 |
£15.3bn |
£7.6bn |
£10.3bn |
£33.7bn |
|
31/12/2023 |
£14.2bn |
£11.2bn |
£13.8bn |
£34.7bn |
|
31/12/2024 |
£13.4bn |
£17.4bn |
£18.4bn |
£36.2bn |
|
Date |
Adviser Models |
DFM Models |
MPS Model |
Other |
|
31/12/2020 |
28.1% |
4.1% |
12.6% |
55.2% |
|
31/12/2021 |
25.4% |
8.2% |
13.2% |
53.2% |
|
31/12/2022 |
22.9% |
11.4% |
15.4% |
50.3% |
|
31/12/2023 |
19.2% |
15.2% |
18.6% |
47.0% |
|
31/12/2024 |
15.8% |
20.4% |
21.5% |
42.4% |
Graham Folley, Head of Business Development and Discretionary Sales at Quilter, said: “MPS growth in the past decade has been nothing short of phenomenal. In 2014 we had only three discretionary managers with model portfolios on the platform with assets around £350m. That number now stands at 149, representing over 3,000 portfolios and close to £18bn in assets under management, excluding our own WealthSelect managed portfolio service. Indeed, if you include multi-asset funds under the definition of outsourcing, we have very much reached a crossover point in how the majority of client assets are managed.
“The trend is clear and adviser appetite to administer advisory model portfolios has markedly diminished. Clients and advisers clearly like the visibility of both the activity and the investments that an MPS provides, and coupled with the downward pressure on fees, they are fast becoming the preferred way to implement the investment means of a financial plan.
“However, that visibility needs to be properly interrogated, as the growth of MPS has brought about new and possibly unappreciated risks. MPS providers are making greater use of passives to help drive costs lower, but this brings about a latent risk some advisers and their clients are not necessarily aware of. With the US making up over 70% of the MSCI World index, and the Magnificent Seven around a quarter, some MPS portfolios are concentrated in a small handful of names and may lead to outcomes that cause some clients discomfort. Given how this would expose clients in a market downturn, as evidenced during 2022’s fixed income struggles, due diligence of the investments, as well as the operations, of an MPS is more vital than ever.”
