A team approach
JM Finn saw immediate success with this approach in 2012, where other firms did not. Rather than putting model portfolios on third party platforms and waiting for the funds to flow in, the team sought engagement with IFA firms by structuring portfolios specifically along the lines they wanted to meet their clients’ needs.
Colquhoun said, “That’s how it started, and it just evolved from there.” JM Finn has launched an MPS service for internal clients only, and soon they will launch an external MPS service.
Colquhoun hopes this new external service will enable IFAs to test out the firm’s approach and then to progress to having more detailed conversations with the team about their tailored platform solution.
Discussing MPS more broadly, Colquhoun had a lot to say, “There is no doubt that MPS is an easy way for many more investors to access discretionary fund managers at a reasonable price.”
MPS is oft labelled a commoditised space. However, Colquhoun doesn’t see the recent growth as a negative, far from it, saying, “ultimately, I think MPS is a really positive step forward to enable more people to invest in good products.”
Colquhoun continued, “Yes there’s commonality in the MPS landscape, and perhaps that makes it difficult for people to get under the bonnet and find out what are the real differences between the various providers’ MPS.”
However Colquhoun sees that as an opportunity for advisers, and an area where JM Finn is poised to stand out. Colquhoun elaborated, “we’re taking a more tailored approach, whereby advisers can have direct contact with their DFM.”
Colquhoun added, “We have advisers who predominantly liaise just with us but we are open to meeting the underlying clients as well if they want to have access to us.”
Perhaps the wealth manager’s biggest strength is their strong collaboration with advisers. Colquhoun said, “We want to provide a service at a reasonable price and try and distinguish ourselves from MPS off the shelf.”
Active v passive
Taking a step back, Colquhoun delved into the active vs passive debate in the context of MPS. Colquhoun reflected, “I think in the early days when passive funds really got going, a lot of people did see it as a threat to the active world.”
Colquhoun noted that it indeed was a threat to the active fund management world, as many active fund managers withdrew from the market place. But Colquhoun highlights the result of this, saying, “What happened was that the active universe has got a lot better because of passive giving it a kick up the backside.”
Colquhoun said that now JM Finn has been left with “sweet pickings” as new fund managers and groups have joined the marketplace enabling them to use a lot of boutique asset management funds within its model portfolio service.
Ultimately, Colquhoun sees the passive approach as being a benefit for active management, certainly where he’s placed, “I see them as being intertwined for many years going forward. I don’t foresee investors having 100% passive funds necessarily – because you can blend them really nicely.”
JM Finn is happy to talk to advisers about its products and services, as the title suggests, collaboration is key.
About Freddy Colquhoun – Investment Director
Freddy is an Investment Director at J M Finn and leads two teams that manage direct private client portfolios and the Model Portfolio Service (MPS) for advisors. Freddy also sits on key investment committees including the monthly Asset Allocation Committee and regularly contributes at J M Finn Investment Conferences and publications. Freddy joined JM Finn in 2005 from HSBC Investments, is a Chartered Fellow of the Institute for Securities and Investment and holds https://www.jmfinn.com/a Masters in Politics from the University of Edinburgh. Freddy is married with three children and lives in Hampshire. In his spare time he enjoys cricket, yoga, playing the piano and bee keeping.
