As WealthSelect celebrates its eleventh anniversary, Andy Miller, Lead Investment Director at Quilter, looks at how much financial advice has changed since 2014, and what could change in the future.
In February 2014, the Retail Distribution Review was just over a year old, most financial advisers managed their own client portfolios, and on-platform managed portfolio services were in their infancy. In fact, on the Quilter platform, not a single penny went into a managed portfolio service.
Since then, we have seen a substantial industry trend of advisers who no longer see their value as being investment managers. They have instead embraced the value of being holistic financial planners.
A recent NextWealth study showed that 59% of those offering client-facing advice at high-growth firms now refer to themselves as financial planners. They are more likely to work for a chartered firm, with a higher level of qualification, and be younger than their adviser counterparts[1]. They see their role as that of a ‘financial doctor’. Their role is to assess the financial health of their clients and prescribe the right medicine to help them achieve their objectives.
This trend towards more holistic financial planning, beyond investment management, has led advisers to move away from running their own portfolios in favour of outsourcing. After all, doctors do not usually manufacture the drugs themselves.
This shift has been partly down to the operational challenges of managing such portfolios on an advisory basis. The more clients an experienced adviser has, the greater this challenge becomes - so it is quite easy for an adviser to become a victim of his or her own success.
However, this change has also been driven by an increased awareness of what clients really value. In the US, studies have estimated that individuals can spend up to 9 hours per work week worrying about their personal finances[2], which can impact their overall well-being. Alleviating this worry can’t be achieved by investment management alone. Whereas holistic financial planning with its thorough analysis of the goals and objectives of clients and then building and delivering the right plans to achieve them, can provide the answers investors are looking for.
Another factor in the growth of the ‘financial doctor’ has been the huge evolution of the solutions available. WealthSelect is a prime example of this. In 2014, the original 16 portfolios were launched. Then, in March 2022, a further 40 portfolios were launched. These new portfolios offer advisers and their clients access to passive, responsible, and sustainable investment options, all of which have an impressive track record since inception.
The expansion of WealthSelect in March 2022 was designed to serve advisers reviewing their investment proposition in light of the regulatory challenges of the Consumer Duty, which requires advisers to demonstrate they have matched products and services to the specific needs of their clients. The greater the range of options available to an adviser, the greater their ability to meet the specific needs and preferences of their clients.
So, what does the future look like for advisers providing investment advice? There are two main areas that will change dramatically over the next few years when it comes to the managed portfolio service market.
The first is transparency. Until recently, it has been very difficult to compare different portfolios on a like-for-like basis. This has been partly down to a lack of consistent data, but in some cases, the providers themselves have been reluctant to share costs or performance numbers in a clear and open manner. This is unacceptable. We believe that any provider of a managed portfolio service should be transparent and open with their data. We are hopeful that transparency will improve as the market grows, allowing advisers to make a more informed choice.
The second is the rapid pace of technological development. The use of technology will allow the providers who embrace it to improve portfolio construction, research, risk management, and customer servicing. This will deliver even more benefits to the advisers and their clients who choose to outsource to a manage portfolio service. However, while technology can provide many efficiencies, 'peace of mind' often depends on human empathy and experience, making it less replaceable. Investors are much more likely to follow advice from a human than from AI. A recent study by Boring Money, showed that the number of investors who would accept AI investment recommendations declined by 7% between 2022 and 2024[3].
So, the future is bright for advisers who partner with the right managed portfolio service provider, but what does that managed portfolio service provider look like?
They should have the right range of investment options, a solid investment process, reasonable costs, and ultimately deliver the right outcomes for investors. In an increasingly competitive market, the provider should be open and clear about all these elements to allow advisers to make the right choice for their clients.
If you’d like to know more about a managed portfolio service that ticks all these boxes - find out more about WealthSelect.
[1] NextWealth, January 2025
[2] The Future of Financial Advice White Paper, World Economic Forum, July 2024
[3] Boring Money
Andy is the lead investment director heading up the investment director team at Quilter. Andy joined Quilter in 2015 from Architas having previously held senior distribution roles at life offices and fund managers, including 10 years at Prudential.
Andy is a chartered financial planner, a fellow of the Personal Finance Society, and holds the CFA ESG certificate.
