Managed Portfolio Service belongings are rising rising quicker on common than the platform market and prices and fees for shoppers are falling, based on a brand new report by a wealth consultancy.
NextWealth’s newest MPS Proposition Comparability Report reveals that belongings in discretionary MPS grew 12% within the yr to 30 September in comparison with a 9% development price for adviser platforms over the identical interval.
On the identical time the common worth paid by finish shoppers of MPS fell once more to 0.60%, down from 0.67% in 2022 and 1% in 2021.
Managed (or Mannequin) Portfolio Companies are used primarily by funding advisers to maintain funding prices down and to entry ‘off the peg’ portfolios for shoppers.
Heather Hopkins, managing director of NextWealth, mentioned: “This improve (in MPS belongings) means that whereas the general market pie expanded by 9%, discretionary MPS has managed to safe a bigger slice, outperforming the broader adviser platform market.
“It highlights that discretionary MPS stays a strategic development driver inside the wealth administration sector.”
She mentioned there have been doubtlessly vital advantages for shoppers.
She mentioned: “They now pay a median of 0.4% much less on an asset-weighted foundation for discretionary MPS than they did in 2021. DFMs (Discretionary Fund Managers) that cost much less are rising belongings extra quickly, the same development to final yr.
“Corporations charging a mixed MPS price and OCF of lower than 0.8% grew by a median of 8% within the yr to Q3 2023. This compares to destructive development for these charging 0.8% to 1% and 1% development for these with fees over 1%.”
The report discovered that the common OCF has fallen by 35 bps previously three years to 40 bps (on an asset-weighted foundation).
Ms Hopkins added: “Some corporations are utilizing a fettered fund vary or an allocation to in-house merchandise to carry down fund fees. Surprisingly, we didn’t see a shift away from energetic funds this yr. There was a 1.9% improve in allocation to energetic.”
Whereas the market dimension has grown, the variety of DFMs that advisers work with continues to fall, says NextWealth, and this development has accelerated with the Client Obligation. Advisers work with a median of 1.7 DFMs, down from 2.2 final yr.
Amongst different tendencies NextWealth discovered that monetary recommendation corporations had been focusing extra on planning than managing investments in-house and youthful planners, in significantly, had been extra keen to outsource investments. The Client Obligation can also be nudging the market in direction of outsourcing and DFMs are being squeezed on worth.
• NextWealth’s newest MPS Proposition Comparability Report