Increasingly, advisers are telling us the same thing, says Rebecca Stein, Head of Product at Charles Stanley, part of Raymond James Wealth Management. They value the efficiencies and governance benefits of outsourcing. But they don’t want investment solutions that feel disconnected from their own proposition.
Increasingly, advisers are telling us the same thing. They value the efficiencies and governance benefits of outsourcing. But they don’t want investment solutions that feel disconnected from their own proposition.
More importantly, they don’t want a provider they simply outsource to, they want a partner they can work alongside.
That helps explain the growing demand for co-manufactured managed portfolio services, or MPS.
For years, MPS was viewed mainly as an operational solution. It helped improve consistency and freed up time for client relationships. That remains true today. Many small and mid-sized firms avoid fully building in-house discretionary capabilities. This reflects the complexity, governance burden and regulatory scrutiny involved.
However, the market has evolved. Advice firms are becoming more sophisticated businesses. They have clearer identities and more defined client niches. They also hold stronger views on how portfolios should support outcomes.
Unsurprisingly, they want investment solutions that reflect their priorities and those of their clients more closely. These include attitudes to risk, retirement income, sustainability and intergenerational planning, just to give a few examples.
Off-the-shelf portfolios still work for some firms, but not all.
A shift towards collaboration
The direction of travel is clear. Recent Charles Stanley research found that 91% of advisers value a strategic partner. They want support in co-manufacturing MPS aligned to client goals. Advisers increasingly want deeper collaboration rather than traditional product-led relationships. In practice, that means moving away from ‘set and forget’ relationships towards ongoing engagement and shared accountability for outcomes, something we are seeing consistently across our own strategic partnerships.
At the same time, differentiation is becoming more important. The advice market is more competitive and more consolidated. Firms are thinking carefully about how to stand out.
If advisers rely on identical investment solutions, differentiation becomes harder. It becomes difficult to explain what makes one offering unique. The answer, we believe, lies in being genuinely client-first and having an unrelenting focus on outcomes.
Consumer Duty raises expectations
Consumer Duty has accelerated this trend. Advisers must demonstrate that portfolios are suitable. They must also explain why they are suitable for a specific target market. This inherently pushes the relationship with providers to become more collaborative, as advisers need deeper visibility, stronger alignment and clearer evidence of decision-making.
Our research reflects this shift. Alignment with target market suitability is now a top selection factor. The ability to tailor portfolios is also rising in importance. This includes objectives such as income, growth and sustainability.
These conversations are happening across the market. Some advisers want greater influence over ESG positioning. Others want tighter volatility controls for cautious clients.
Some firms focus on consistency between portfolio design and client experience.
Importantly, this does not signal a return to advisers running portfolios themselves.
Most firms recognise the value of specialist providers. These include research capability, governance oversight, operational scale and disciplined investment processes. Advisers are not trying to completely replicate these capabilities internally.
Instead, they are looking for providers who can bring these capabilities as a natural extension of their own business.
That distinction matters. Being a partner in this context is not just about involving advisers in portfolio design. It is about how we work together day to day.
This includes open dialogue on portfolio positioning, shared governance through joint committees, and ongoing support with client communications and proposition development. The goal is to ensure portfolios genuinely reflect the adviser’s philosophy, rather than sitting alongside it.
Advisers want portfolios that extend their advice philosophy. They do not want a generic outsourced component.
Clients are increasingly aware of this too. Investors are asking more questions about portfolio construction and management. Advisers therefore need confidence in the solutions they recommend and support from truly service-led providers.
The future of MPS
Co-manufactured MPS is well positioned to meet this demand. The strongest arrangements combine complementary strengths.
These include governance, expertise and infrastructure from the discretionary manager. They also include client insight and strategic input from the adviser.
These conversations take many forms, from ESG positioning to volatility control and retirement outcomes, but they all point to a need for greater alignment between portfolios and client goals.
Client segmentation and communication may also play a role.
The broader market is moving in this direction. Nine in ten advisers currently use MPS. Many expect their usage to increase over the next 12 months.
Many firms now work with multiple providers. This reflects a search for greater flexibility and differentiation.
There are challenges, of course. Co-manufacturing requires clear governance and defined responsibilities. It also depends on meaningful engagement between both parties.
There is also a risk of unnecessary complexity.
There is clearly a balance to strike. Clients do not want portfolios they don’t understand. They want trust, clarity and results. Customisation should never be pursued for its own sake.
A clear direction of travel
Off-the-shelf MPS will continue to play an important role. However, we believe the market is moving beyond purely standardised solutions.
Advisers want the flexibility of a partnership that aligns with their business model.
Ultimately, this reflects the evolution of the advice market. It is shifting towards more personalised and service-led propositions.
For providers, that means moving beyond simply providing portfolios and instead building long-term partnerships that evolve with the adviser’s business and their clients’ needs.
