Defaqto is launching an asset allocation modelling system and a paraplanning service over the next two months.
The asset allocation model will use dynamic modelling rather than stochastic modelling. Advisers will be able to choose a standardised or bes-poke asset allocation service and extend this to include a fund selection service.
Defaqto says it has not yet finalised the charges for the new services.
Chief operating officer Zahid Bilgrami says: “Stochastic modelling is quite simplistic and tends to overestimate returns and underestimate downside tail risk.
“Our approach is a deterministic approach, where we are more realistic about ret-urns for clients and more guarded towards protecting against downside risk. Our proposition will help advisers formulate a proposition that will justify their fees.”
The paraplanning service has been piloted with a dozen advisers and will be offered to the market by the end of May.
Page Russell director Tim Page says: “As long as the assum-ptions in the asset allocation model are completely free from provider influence, it could be a good tool for advisers.”