A sincere thank you to everyone who has responded to our request for comments about the DFM issue. It’s clear that the arguments presented by Harry Katz in last week’s feature don’t meet with universal agreement – to put it mildly. But that there are profoundly valid points of view being advanced by both sides of the argument. Here’s a selection.

 Please keep the responses coming, either by commenting directly to the articles or by emailing Michael Wilson at editor@ifamagazine.com. We will not publish your name or contact details without seeking your permission first.

Michael Wilson, Editor


From Adviser, Wales (name withheld by request)

I am an experienced adviser who deals the majority of my time with high net worth clients and often with Deputy’s and Professional Trustees.

The type of reporting offered by this article can be very damaging , with its insinuations, the key to all advice is circumstances which the article doesn’t take into account.

I am a frequent user of DFMs usually as only part of a solution for many of my clients and yes I do charge ongoing advice charges to these contracts, but I run the overall portfolio and control amounts,  risk profile , advice on appropriate wrappers etc etc.

The DFMs are particularly useful and cost effective for use with Deputy’s or POA’s as they will also charge for their time. By using a DFM I can run open mandates  for the use of ISA & CGT allowances etc and don’t need to meet with the POA’s and Deputy’s for signatures etc. which they would charge the client for.

There are other benefits of interacting with DFMs for higher net worth clients and the flexibility than can offer such as incorporating structured products where applicable in a cost effective way, and also being able to remove a single stock or fund from a portfolio far quicker than any IFA I have ever met.

In summary there is certainly a place for DFMs in advising clients, and it is the adviser that takes the responsibility of how much and which DFM to use, and it is a dangerous suggestion that clients should take these decisions themselves.

From Phil Castle, Financial Escape Ltd, Ramsgate

I pretty much agree with Harry Katz. It is NOT about outsourcing, it is about the difference between advisory and discretionary permissions.

 My Locum has discretionary permissions and eu passporting as he needs it for his client base.

 As his locum, I have made sure I have discretionary Qualifications and the Securities and Dealing Exam so I can cover for him when on holiday.

 We use 7im model portfolios as well as some of our own, but we don’t need discretionary permissions for that.

 Financial Escape Ltd

From Ian Head, Fund Management Ltd, Ascot

We don’t use DFMs, for the very reason you have referred to!  I suspect that the FCA would say that WE advised the client to use that particular DFM.

So if we chose to use a DFM we would have to keep a very close eye on what they were up to, and if we are going to be doing that, then we might as well

Manage it ourselves….which we do!!!

Fund Management Ltd


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