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Multi-manager View: Match winner

Multi-manager providers are keen to highlight the virtues of their discipline to intermediary firms, citing time pressures, regulatory issues, costs and resources among the many reasons an adviser should consider outsourcing investment management responsibilities. And, of course, many do. However, I am becoming aware of more and more firms that are either loath to relinquish this particular function or do so with a sense of reluctance.

Based on the simple premise that you cannot be all things to all people, I would suggest that many of the multi-manager products currently available do not offer the ideal solution for outsourced investment management and, as a result, do not appeal to certain intermediary firms. It is often a case of selecting the closest match to, rather than actually meeting, the client need. We see a growing demand for a more tailored, bespoke approach.

A bespoke multi-manager solution provides more than a core performance engine for client investment portfolios. Bespoke can mean designing an entire solution around a specific client need – a solution that can encompass the investment mandate, the product structure and the servicing model, all of which can be based around the existing skill-sets within an intermediary firm, with a view to enhancing the overall business.

The prospect of creating tangible value within the company must be the key objective of any business. On a simplistic level, there are three key potential contributors to the creation of value within a business: a recurring income stream; the client base, and ownership of assets, which, for these purposes I mean funds under management. The latter is an area where few intermediary firms tread, yet one that is worthy of more attention.

The benefit of asset ownership can be seen from both a servicing level and business level. At North, we believe asset ownership allows the intermediary to:

  • Control the investment mandate.
  • Control the fee structure.
  • Offer clear differentiation against the competition.

All these benefits offer the potential to enhance a growing, recurring income stream and engender greater loyalty among the client base. While off-the-shelf multi-manager products clearly meet many needs, they cannot offer these additional benefits, primarily because the provider takes ownership of the assets from the intermediary. One of the simplest ways to own assets is to have your own investment fund, as this can provide additional benefits to the business by broadening distribution opportunities and enhancing brand penetration. We believe the multi-manager discipline lends itself well to providing the intermediary with a suitable core product proposition with which to gather assets.

Some intermediary firms have already gone down the path of launching their own funds and outsourcing the management of those funds to a professional multi-manager. Of course, there are barriers to entry, otherwise more intermediary firms would follow suit. But if you thought launching your own fund would be out of the question, think again.

North is among a new wave of multi-managers, and we have set ourselves up specifically to provide services that are capable of overcoming these barriers to entry, making asset ownership a distinct possibility for intermediary firms of all shapes and sizes. There are many different approaches you can take, and this will depend heavily on the nature of your business, your timeframe and your objectives.

But ultimately, I am convinced that there will be an approach suitable for your business, and there are a growing number of firms out there that can help you along the way to finding your tailor-made solution.

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