Evercore Pan Asset

This year we have found more and more IFA groups asking us about dynamic asset allocation using passive investments. Putting that in english, they have been interested in our Big picture approach.  Why not concentrate on trying to make intelligent judgements about how much to have in shares or bonds or property, and then index the chosen assets by buying lower cost tracker funds?

IFAs today hear time’s winged chariot drawing near, in the form of the Retail Distribution Review. From 2012 IFAs need to charge fees and make declarations of their charges in an approved way. That is rightly leading IFAs to ask themselves how much should an IFA charge for the investment management part of the service, and what will the overall charge look like in an increasingly competitive market?

Many IFAs are also asking themselves how much investment management skill they need to buy in for their clients, as it is unlikely that an individual IFA has the time to consider all the main markets and share opportunities. IFAs have a lot to do understanding client needs, keeping clients happy and doing all the other things you need to do to provide good service in a multi client business.

Most IFAs have gone out to buy investment management expertise in recent years: they recommend particular funds or investment managers to their clients, once they have worked out their needs, means and suitability for risk. In the new regime there will be even more attention focussed on the total costs – the front end charge of the fund they are recommending, the annual management charge, and any other charges, as well as the IFA fees and charges.

That is why many good IFAs are now considering a better value model for investment management.

At Evercore Pan we have worked away to produce a variety of solutions for IFAs wanting to get ahead of the RDR changes. Some have opted to use our OEIC funds, which provide an investment fund to a specified level of risk using choice of asset allocation and indexed investments. Some have set up their own system on a platform of their choice, using us as the investment manager. We can negotiate a competitive fee level for managing the money, whilst the IFA retains the client relationship and the bulk of the fee for handling each individual and their savings. Some want their name on the investment management, with us as sub contractors carrying out the day to day. Some want our best views and our name on the service they offer. Like all these things, the more money you can bring to us to manage, the lower the charges for all concerned. For sums above £10 million the tailored service will always be cheaper than the OEIC route, and for sums above £100 million considerably cheaper.

We would be happy to talk to more IFA groups, as we think this is the best way forward for many of them and their clients.