Our own discretionary fund management service to be launched

Apr 1, 2020 | Tony Byrne's View

Wealth And Management has offered a discretionary fund management, DFM, service indirectly through Parmenion for a number of years. In the last 2 years we have offered the CCM Intelligent Wealth Fund alongside the Parmenion Strategic Passive strategy. We are currently planning to offer our own DFM service later this year on another wrap platform.

So what is discretionary fund management?

Discretionary Fund Management is when an investment professional known as a Discretionary Fund Manager (DFM) builds and manages a portfolio of investments on your behalf. They take into account how much you have to invest, the level of risk you are prepared to take, your financial goals, and your tax position.

Clients of ours who are invested on the Parmenion wrap platform have their investments and pensions managed by Parmenion as discretionary fund managers. In addition to this the majority of our clients have invested 5%-20% in the CCM Intelligent Wealth Fund which is managed by our sister company Minerva Money Management.

Discretionary investment management is a form of investment management where trading decisions are made for clients at the portfolio manager’s discretion. Under non-discretionary investment management, otherwise known as advisory investment management, trades must be discussed and approved by clients before taking place.

Wealth And Tax Management used to offer an advisory service to clients using our own centralised investment proposition up until a few years ago. We achieved excellent returns net of charges over a 25 year period.

We researched the market and found that Parmenion’s investment returns were on average 1% a year better than ours over the previous 5 years and that their charges were much lower than the average wrap platform’s at 0.36%-0.46% per annum compared to the market average of 1.2%-1.3% p.a.

So we decided to recommend transferring clients’ investments and pensions to Parmenion. We still have a lot of work to do behind the scenes constantly reviewing Parmenion’s numerous investment strategies and advising clients which ones to use. Each of Parmenion’s investment strategies consists of 12-15 funds. They offer both passive (index tracker) funds and active funds.

As our sister company, Minerva Money Management, has discretionary permissions, this means that the company may not only run its own funds but also offers discretionary fund management in its own right. Hence the reason we have decided to launch our own DFM service. It will be based on Minerva Money Management advising Wealth And Tax Management which funds to invest in on behalf of our clients. We are currently reviewing the various platforms before making a decision over which one to use.

The major advantage to clients, and to us, of a DFM service is that clients do not have to take advice and then make a decision whether or not to accept that advice. Minerva Money Management as discretionary fund managers, makes that decision for them.

We have plans to offer a number of exciting DFM strategies to match clients’ various attitudes to investment risk. We remain convinced that our DFM service will offer excellent value for money and superior investment returns to most other DFM providers.

Just watch this space for when our discretionary fund management service is launched later this year. You know it makes sense.

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