‘Confidence during market volatility’ identified as key driver of MPS growth

Providing confidence during market volatility has been identified as the client need most effectively addressed by model portfolio services (MPS), according to a study from Nedgroup Investments.

The firm asked financial advisers to select up to three client needs that are tackled most effectively by MPS, with 52 per cent of respondents citing the confidence they provide in volatile markets.

This was followed by diversification (38 per cent), cost transparency/value for money (32 per cent), and mitigating regulatory burden (28 per cent).

Almost a quarter (24 per cent) of advisers pointed to ongoing professional management, while 16 per cent cited simplicity and clarity, and 14 per cent selected reliable risk targeting.

Advisers were also asked what the most important facets they look for are when selecting an MPS provider.

Evidence of value for money/Consumer Duty alignment was the most popular consideration, cited by 42 per cent of advisers, followed by consistency of outcomes relative to stated risk level (34 per cent), and investment process, governance, and team credibility (32 per cent).

The same proportion (32 per cent) pointed to quality of reporting, service, and adviser support, while 30 per cent cited performance and track record, and total cost to clients.

“We were not surprised to see that ‘confidence’ was a key reason behind the use of MPS among advisers, especially given today’s heightened volatility,” said Nedgroup Investments chief commercial officer, Apiramy Jeyarajah.

“Advisers are looking for a safe pair of hands for their clients’ investments. They want to see experienced fund managers who have been through a number of different market cycles as well as diversity of ages and experience in the teams, for balance.

“The survey also highlighted that advisers are increasingly regulation conscious as this aspect of their role becomes more burdensome.

“Investment outsourcing to ease regulatory burden is not a new concept but the importance of credibility is now a key priority for advisers as Consumer Duty weighs heavily on their shoulders.”

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