Ian Aylward, Head of Investment Partnerships at AJ Bell, highlights the growing demand for bespoke Managed Portfolio Services (MPS), which let adviser firms build ranges that reflect their own investment philosophy.
The simple, transparent, multi-asset approach offered by Managed Portfolio Services (MPS) has made them increasingly popular among advisers in recent years. What’s perhaps less well known is that adviser firms can now have their own bespoke MPS range. Such an arrangement involves working closely with each firm to ensure that their ‘corporate DNA’ or investment philosophy is fully reflected within a tailor-made MPS range.
There are many benefits to clients of such an arrangement and a vast number of parameters can be tailored. Examples include, at the outset, the number of models and choice of names for those models. From an investment perspective the number of risk bands (typically mapping to a client risk profiling tool) can be agreed upon as can the proportions of active and passive exposure. Often bespoke MPS will have a domestic bias to the asset allocation or a particular benchmark to beat. In addition to a mainstream range, advisers sometimes also seek an ESG range or income range. This level of customisation avoids much of the compromise inherent in traditional ‘one-size-fits-all’ MPS ranges and allows the creation of something truly relevant to the adviser’s own clients.
There are many benefits to the adviser firm too. Having a bespoke MPS dramatically reduces business risk and creates many efficiencies that can allow their business to grow. The DFM manager will typically provide a robust framework, proven capability and operational experience to ensure enhanced governance and careful oversight. Furthermore, investment expertise will be improved. This may include detailed investment support and access to underlying share classes at a lower cost (given the likely scale of the DFM manager). The manager also takes care of regular due diligence on the underlying active and passive ETFs and funds. This is typically done by meeting with fund managers to assess their performance drivers. Value for money assessments will also be provided. This efficient operating model helps to deliver compliant investment solutions to clients, without diverting the adviser’s focus from supporting their clients and growing their business.
The degree to which the adviser gets involved is entirely up to them. Whilst they are classed as ‘co-manufacturers’ in a regulatory sense, at one extreme this can go little further than setting initial parameters and co-branding. At the other extreme, more engaged advisers may even suggest an active fund to be considered for inclusion or an asset class that looks particularly interesting at the time. Advisers are kept informed through regular review meetings whilst clients are kept informed through monthly factsheets and quarterly reporting.
This feature was part of our MPS Insights 2025 publication – designed with advisers’ needs in mind. You can download your copy of the publication here…. https://ifamagazine.com/2025-managed-portfolio-services-mps-insights/
