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Making outsourced investment management work for your clients

This article is an extract from the Outsourcing supplement IFA Magazine has produced in association with Schroders. You can view the full supplement here.

Financial Planners have never been so busy. As well as delivering excellence in client service, the pressures of keeping up with the weight of changes to regulation and legislation is placing an increasing burden on the resources of financial planning firms.

Due diligence is so important because it’s about doing everything you can with the information available at the time to make decisions that will help you to achieve the best possible outcome for clients

So, you’ve made the decision to outsource the investment management aspect of your financial planning business to a specialist, third-party provider. You may even be already using an outsourced service – or combination of approaches – but considering some changes or adding to the list of providers you use. More and more financial planning firms are seeing the benefits of doing just this. Working in partnership with a specialist provider (or providers) means that you can focus on your strengths in delivering excellence in financial planning and client service whilst also reducing the compliance burden, improving portfolio reporting and reducing costs. For clients too, there’s the benefit of having the greater peace of mind which comes from knowing that their portfolio is being constantly and actively managed by expert investment managers who have significant research and analysis resources to back up their judgements.

Doing your due diligence

But how do you collect all the relevant information that is needed to check out a particular product, fund or service? How do you conduct effective due diligence to get under the skin of providers’ services in order to see if there is genuine compatibility with your business and the needs of your clients? The importance to your business of getting this right can’t be overstated. Some might argue that due diligence is just good practice, and in many ways that’s true.

Any proposition needs to be well researched and assessed so as to ensure that its use can be justified both in the present and in the future. Yes, you need to do proper checks at the start, with information gathered, verified and stored, and crucially, fact separated from opinion. These things should happen because it’s in clients’ interests, not simply to tick a box for compliance purposes. And therein lies the rub: due diligence is so important because it’s about doing everything you can with the information available at the time to make decisions that will help you to achieve the best possible outcome for clients.

Good practice in this area includes a healthy degree of professional scepticism. It isn’t enough to gather all the information available and accept it at face value. Marketing literature needs particular care. When extending it to any independent validation of the information, this too needs to be considered thoroughly. Any third party endorsement is helpful, but it is important to understand the basis on which the endorsement was given and the credentials of anyone making judgements.

Working together with an outsourced investment manager – the right fit

This is where understanding the complete resources of the third-party manager really come into play. Once you start to dig deep, you’ll discover the detail of what they do and how they do it – how they actually manage your clients’ money. You’re looking for a strong cultural fit of course, which means entering two-way discussions to ensure that they have a strong grasp of your business and its needs in just the same way as you do of theirs.

Getting this right from the very beginning can make the difference between having an acceptable approach and an excellent one which stands the test of time – that makes sense not just for your clients but also for your business too.

This supplement gives just a snapshot of some of the services that are available to you and your clients from Schroders and Cazenove Capital. It is designed to give you a flavour of the considerable resources and global reach which the organisations have – and why it’s their approach of working closely with financial planners and their clients which ensures that partnership is built to last.

To find out more about all the outsourcing options available from Schroders and Cazenove Capital visit

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