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Small DFMs have competitive advantage, says Wellian Investment Solutions

Smaller discretionary fund managers (DFMs) now have a greater competitive advantage over bigger providers in the current market, according to Wellian Investment Solutions.

They are able to offer advisers a service that presents better value for money in a market where fees are already under significant downwards pressure.
Latest figures from Defaqto have shown that increased competition in the discretionary fund management market has recently led to a sharp drop in fees, with particular pressure on pricing for managed portfolio services on platforms. However, Wellian Investment Solutions says DFMs will need to compete on other areas aside from price if they are to survive the current market.
Chris Mayo, investment director at Wellian Investment Solutions, says small DFMs are able to compete on other areas besides price by offering a service that presents better value for money and greater flexibility than the options available for managed model portfolios with larger firms.
Mayo says: “In a market where all DFMs have been slashing fees to attract assets, advisers are looking to other factors to help them decide who to partner with aside from which provider is simply the cheapest. Adviser are clearly looking to pay less but they also want to know that they are getting a good value service, especially if they are also running a small business. For that reason, smaller DFMs definitely have the competitive advantage in today’s market, as we have to work much harder for our fees.”

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