One of the positives of living through challenging times is how it highlights strategic partnerships, such as that of an agile discretionary fund manager.
Staying on top of your financial portfolio can be time-consuming and, when unsettling global events come into play, it can be daunting too. While your wealth advisor is there to guide you through the process, a discretionary fund manager (DFM) is able to make more drastic and urgent shifts, to take advantage of market opportunities.
What is the difference between a financial advisor and a DFM?
A financial advisor is a professional who provides financial services to clients based on their financial situation. Using their expertise and knowledge, they will do a financial analysis of your current circumstances and establish your needs and goals. Once they have this picture they design an investment strategy taking into account your short- and long-term objectives, risk attitude and lifestyle requirements. The portfolio will usually encompass investments, insurance and tax strategies. With regular check-ins, they are able to re-evaluate your portfolio and advise on any changes, which can then be implemented with your approval. They are, in essence, your financial planning partner.
A DFM is a skilled investment professional who builds and manages your portfolio on your behalf. Although you give a DFM the autonomy to execute the strategy presented by your advisor and make highly tailored decisions on your behalf, the DFM acts on mandate based on your risk profile.
The relationship between your financial advisor and DFM should be like a partnership, each focusing on their respective strengths: the advisor determines your investment needs and the DFM executes the plan. Both have a responsibility to ensure the solutions are right for you.
Why Carrick uses DFMs
Carrick has always put the client first. “That means recognising and focusing on our core strengths, namely financial planning, ongoing communication, monitoring of a client’s plan and personal circumstances, and building relationships with those who have the expertise and wherewithal to ensure our clients’ portfolios grow in line with expectations,” explains Carrick Wealth CEO, Craig Featherby. It is for this reason that a DFM is part of Carrick’s financial and wealth management strategy for all clients.
Using a DFM is not a new concept: high-net-worth individuals experienced in the investment world and individuals with large investment portfolios often use the services of DFMs. But, as Featherby points out, the entry threshold (the minimum investment amounts) required by DFMs often prevented some clients from including DFMs in their financial plan.
“Carrick’s partnership with selected DFMs means we are able to offer that access to all of our clients who wish to make use of them,” he explains. “Recommending and agreeing to appoint a DFM enables the wealth specialist to focus on their priorities, leaving the DFM to exercise professional discretion in building and managing a portfolio of investments on the client’s behalf, and according to the client’s risk profile. With so many thousands of funds and investment vehicles out there, it makes sense to have someone with the right expertise, skills and daily hands-on ability to look after your portfolio.”
The selected DFMs are experienced professionals who monitor the markets on a daily basis and make the necessary strategic and tactical allocation decisions. They operate globally in multiple jurisdictions and are judged on their consistent track record backed by robust administrative and operational structures. “One of the three pillars of Carrick’s business philosophy is transparency, along with integrity and professionalism,” says Featherby. “We demand, and see to it, that regulatory and compliance standards are met by all our DFMs.”
What are the benefits of a DFM?
Due to their autonomy, a DFM is able to:
- Rapidly react to market conditions
- Have access to highly specialised funds not always available to individual or new investors
- Diversify the client’s investments
- Save on costs through bulk dealing
- Invest in active managed funds and passive, low-cost exchange-traded funds.
- Provide bespoke solutions
- Re-balance whenever required
“On top of it, the client need have no concerns about constantly monitoring their portfolio. By working closely with their wealth specialist, and through regular reports showing the performance and weighting of the portfolio, the client will be able to see immediately whether their financial planning objectives are being met and act accordingly,” says Featherby. “The shortened decision-making time allows for quick adjustments and allocations based on market circumstances, which means the client’s money is always in the market and, more importantly, in the right places in the market.”