Supporting advisers who use third party Discretionary Fund Managers (DFMs) is a key priority for us. It’s a big growth area. Indeed, we’ve seen a 178% increase in the number of advice firms active in this area over the last year with assets under management linked to DFMs rising by 88%.

We believe much of this growth is down to the significant enhancements we’ve made to our DFM service over the last year or so. I’ll touch upon these developments in due course but first I’d like to remind you of what our service offers advisers.

As you would expect, our service lets you use defined models from DFMs for a broad range of our wrappers. We now offer 69 DFMs through our service, with more on the way. Outsourcing investment decisions in this way allows you to focus your time on financial planning while helping you to manage risk within your business. What’s more, your clients benefit from the investment expertise provided by the DFM while you retain full visibility and ownership of your client accounts.

In terms of managing and administering client accounts, our service allows you to perform the following actions in an efficient and straightforward way. You can:

  • Link directly with your chosen DFMs to access and use their models
  • Assign client accounts to those models
  • Purchase a DFM model directly for new business or realign existing client accounts
  • Carry out rebalances to align your client accounts to a DFM model
  • Align other account attributes, such as regular savings plans and withdrawal plans to a DFM model (although, for withdrawal plans, this is only available if the model doesn’t include cash) 
  • Generate x-ray reports and download fund disclosure documentation for DFM models.

New features of our DFM service

In addition to adding many more DFMs over the last year or so, we’ve made enhancements to how adviser/DFM fees are administered. So, for example, you can enter the DFM fee and your own fee online and these will be shown separately in the illustrations. DFM fees can be entered on the system with or without VAT. In addition, fees are now paid separately to both advice firms and DFMs.

Another new development relates to the requirement for DFMs to send quarterly reports to clients. As part of our service, DFMs can now elect for a Fidelity-produced quarterly report to be sent to clients on their behalf, although they may elect to continue to do this themselves. If they choose to use our report, they can add their own commentary as they see fit.

We’ve also just introduced a 10% depreciation reporting service. This is an optional facility for DFMs whereby notifications can be sent to clients when a portfolio depreciates by 10% (or multiples of 10%) or more over a reporting period. Features of the service include:

  • It detects when a threshold is exceeded in a calendar reporting period for a client account
  • You can opt in to receiving an alert if any accounts exceed a threshold on any given day
  • Clients can be contacted directly via email if they are web registered. A letter will also be placed in their electronic vault detailing the accounts and performance. More information on moving clients online can be found here.
  • MI is available on accounts showing where a threshold has been exceeded and whether affected clients have been contacted. Reports are available to both advisers and DFMs
  • You can view client letters through our Client Management facility.

The DFM will be able to tell you if they have opted into this service or not.

Finally, I would just like to mention that comprehensive information on our DFM service is available through our online Help & Support facility. This covers all aspects of the service, including details on all the available DFMs, information on how to start using a DFM, setting up and administering fees and more on the various reports available to you and your firm. You’ll also find helpful videos that take you through managing client accounts linked to a DFM model.

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