TCF offers three types of service. It will create a portfolio around an adviser or pension trustee’s own portfolio allocation model or work with the adviser or trustee to design a bespoke asset allocation model, then to create a portfolio around this. The other service involves helping advisers to launch their own funds, which are known as distributor influenced funds (DIFs), by providing services such as administration, portfolio modeling and fund management. For all types of service, TCF will create low cost risk-graded passive portfolios comprising exchange traded funds, passive funds and futures.
The company was launched earlier this month by David Norman and Gary Mairs. Norman was chief executive officer at Credit Suisse Asset Management until January last year. He previously worked at Morley – now Aviva Investors – and Insight Investment.
Mairs, who founded boutique advisory firm Folio Partners in 2005, was previously deputy chief executive officer of Insight Investment. Prior to that he was managing director for Friends Ivory & Sime, now F&C Investment.
The portfolio management service is based on TCF’s seven principles of smart investing. These involve setting long-term risk and return objectives to determine asset allocation, minimising costs, diversifying between assets and managers.
Active management is seen by TCF as poor value, as it is more expensive than the potential returns. The company does not invest in anything they do not understand and always complete due diligence in investments. Finally they like to make sure that fund managers’ interests are aligned with those of the investor.
TCF says the cost of its service is flexible and includes options such as fixed mandate pricing and a feature that allows cost savings from its bulk buying to be shared with the adviser, pension trustee and customer.
The firm has negotiated special terms with a number of administration, platform and modelling suppliers, which should help advisers who want to create their own fund range.
TCF estimates that IFAs with reasonable scale in their own funds could offer a solution to customers for less than 1.75 per cent a year, including the cost of the product wrapper, fund management and advice fees of 0.75 per cent a year.
This service could appeal to advisers in the run-up to the Retail Distribution Review. However, its passive only investment strategy may not appeal to some advisers.