45% of IFAs were outsourcing their investment propositions in 2013, with more than half doing so via discretionaries, a pointer that the DFM sector is on a growth path, according to Defaqto.
The number of outsourcing IFAs increased from 42% in 2012, and Fraser Donaldson, Defaqto insight analyst for wealth management, believers the figure is climbing again in 2014.
“One of the biggest consequences of the Retail Distribution Review has been the number of advisers who have already, or are now looking to outsource their investment propositions,” he said.
“Discretionary fund management is still relatively new to large segments of the adviser market. As demand and interest continue to increase, so the solutions available continue to evolve and innovate.
“The choices and options within the market are already very different to what they were just three or four years ago so it is important for advisers to keep abreast of how this market is developing.”
In Defaqto’s latest discretionary fund management update, Donaldson said he also expects corporate activity in the market to increase, particularly from those firms with capital looking to grow assets under management by acquisition.
To this end, the firm’s own research found almost 40% of discretionary firms have group assets under management of less than £0.5bn and almost 50% have discretionary assets under management of less than £0.5bn.