From a platform technology perspective, some build their solutions to suit the requirements of our platform providers.
In general, each individual platform provider will have a solution that works for them in the model portfolio space, and they are not as invested as the DFMs are in making sure their solution is the same as someone else's. It does not matter to them because they have only got their own platform to look after.
DFMs would benefit from a combined solution or an improved way of working, but margins are slim and they may not have the money to invest in platform technology. Not only is it quite costly, but they do not have the influence on the platform providers to dictate changes to their technology.
The result is that we are in a chicken and egg situation where no solutions are emerging.
Where we’d like to see change
One solution to the problem is introducing a micro-service to support MPS within a single platform provider’s offering. It enables DFMs to define models and charges, set product and asset permissibility, rebalance easily and make models available to specific advisers.
Solutions like this would improve competition in the platform space and potentially lead to better outcomes for consumers.
We would like to see the industry as a whole investing and innovating to try some of the issues that currently exist around model portfolios.
What does the future hold for model portfolios?
MPS have helped advisers focus on their valuable client work by providing cost-efficient outsourced investment solutions. But there may come a tipping point where advisers find MPS are no longer delivering the outcomes they expect at the cost they and their clients want.
It is only through effective collaboration and innovative technology that this issue will be resolved. We are urging platforms and DFMs to think carefully about how we can improve processes together to support a promising future for model portfolios.
If we do, it could represent a win for all involved.
India Clegg is a solutions architect at Bravura Solutions
