While advisers tend to charge customers a 1% p.a. fee, the addition of discretionary management services is likely to push the bill beyond 2%. The most common reason financial advisors gave for outsourcing investment work was to avoid risk and liability.
He said that while discretionary managers may give a bespoke service to very wealthy people, investors with less than £250,000 might find their cash was instead invested in a model portfolio. These are compiled by discretionary managers, but contain collections of investment funds run by other experts. They are also sold over investment platforms, which carry their own charges. In the threesixty survey, 21 per cent of advisers said they put clients into discretionary managers’ model portfolios most of the time, while 51 per cent said they did so some of the time.