MPS emerge as 'core building block' in client portfolios

Model portfolio services (MPS) are leading the way in how clients’ investment solutions are being constructed within centralised investment propositions (CIP), according to research from Charles Stanley.

Almost a third (32 per cent) of financial advisers and IFAs cited MPS solutions as the main building block in clients’ investment solutions within their CIPs.

MPS came ahead of multi-asset funds (27 per cent), in-house investment portfolios (24 per cent), and bespoke discretionary fund managers (17 per cent).

Charles Stanley said that while each service had their benefits to clients, MPS allowed advisers to offer scalable and discretionary investment management to clients, with portfolios that are regularly rebalanced and aligned to specific risk profiles.

They also allowed them to focus on other areas of client service and better manage Consumer Duty.

Nearly a third (32 per cent) of advisers said that Consumer Duty has renewed their focus on what services or solutions they offer to clients, while the same proportion (32 per cent) had become more selective in which strategic partnerships they use.

Three in 10 (30 per cent) felt Consumer Duty had helped them do more business, 29 per cent had needed to bring in external governance support to help them in how they operate, and 28 per cent said they had needed to do a lot more training and development.

Recent tax changes had resulted in increased activity in reviewing and recommending investment solutions in client portfolios, with 87 per cent of advisers more likely to recommend model portfolios within this broader shift.

“Advisers are undergoing a clear structural shift in how they construct and deliver client portfolios,” commented Charles Stanley head of product, Rebecca Stein.

“While multi-asset funds continue to play a role, there is a growing preference for outsourced, centralised investment solutions.

“MPS is increasingly moving to the core of these strategies, offering greater consistency, efficiency and governance, as well as freeing up time for advisers to focus on their clients.

“Importantly, many advisers are looking to go further – moving beyond simply selecting portfolios, to shaping how they are constructed, to align more closely with an adviser’s proposition and client needs.

“As the industry continues to shift towards greater personalisation and tailored solutions, we expect MPS to remain a core building block in client portfolios for years to come.”

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