20th July 2023

7 minutes reading time

Blackfinch Tailored Portfolio Service: FAQs

Since the launch of the Blackfinch Tailored Portfolio Service in Spring this year, we’ve been gathering feedback from advisers. Here are some of the most frequently asked questions.

Why have you launched the Tailored Portfolio Service now?

Put simply, we think now is the right time for us to be working in closer partnership with advisory firms. There is growing demand in the marketplace for adviser firms to own more of their investment proposition so they can tailor it to the values, beliefs, requirements and cultures of their client base.

Adviser research told us this demand is being driven by firms seeking a greater level of control over important factors like cost and active versus passive investments to solve their biggest challenges when using off-the-shelf solutions. For firms where a pre-defined Managed Portfolio Service (MPS) range doesn’t quite meet the needs of their clients, or they are looking to create a uniquely competitive offering, we work in partnership with adviser firms to provide a Tailored Portfolio Service that lets advisers set the specifications while we provide the resources to deliver the strategy.

Should I move only a proportion of my AUM or do I need to move all of it? Why should I trust Blackfinch with my entire AUM?

The Tailored Portfolio Service is aimed at financial advisory firms that are keen to take more ownership over their centralised investment proposition – not less. We won’t leave you sidelined. This is your investment solution, built to your specification for your clients, but managed by us.

We are not talking to advisory firms about building an off-the-shelf solution. We want to partner with you to help grow the valuation of your business. For those firms that want to fully optimise their value, it makes sense to have total conviction in the investment solution they themselves have built. Adviser firms won’t get meaningful benefits from using the service piecemeal, or by working across a range of service providers, as they won’t fully benefit from the cost efficiencies and the economies of scale it offers. We think adviser firms should consider the Tailored Portfolio Service as the only investment solution they need.

Will it increase client costs?

No. In fact, the typical outcome is the opposite. Every tailored portfolio solution we’ve been involved with has resulted in equivalent or reduced costs for clients. We believe the service helps drive down costs by driving up efficiencies. We never lose sight of this being a way to deliver a best in class investment service that lets advisers pass on cost savings to their end clients. These cost savings come from introducing economies of scale, by creating efficiencies and putting pressure on each component of the value chain. Typically, as a result, client costs tend to be lower.

Sometimes the largest investment managers talk about economies of scale, without admitting that those cost efficiencies mostly serve them. We want to change the relationship between providers and advisers, as we believe advisers should be able to pass on more of those cost efficiencies to their end clients, while also helping to increase the valuation of the advisory business itself.

As an adviser using the service, how can I prove my continued independence?

The Tailored Portfolio Service is simply a more efficient way of implementing your current centralised investment proposition (CIP). The selection process you undergo in selecting us to manage your CIP, which includes a due diligence process, subsequent monitoring with investment committees and putting the CIP mandate out to tender in subsequent years, is a strong argument for independence. All of those duties demonstrate your continued commitment to ensuring your clients receive the most appropriate investment solution. Additionally, the investment firm who is building your Tailored Portfolio Service should be independent in their fund selection.

Can you provide more information on Blackfinch’s investment track record?

We have an extensive experience of constructing investment solutions with financial advisory firms. It’s a core element of Blackfinch’s business. We have investment teams with a combined 40+ years’ experience of running multi-asset portfolios. Our Managed Portfolio Service offers clients five portfolios to choose from, each with an inflation-plus target return, and has been awarded a 5 Diamond Defaqto rating. 

While our Tailored Portfolio Service concentrates on a newer part of the market, Blackfinch has always been an adviser-facing business with a strong reputation of adviser and client support and investment expertise and strength. We’re now making these investment teams available to advisory firms, by partnering with you to build portfolios that suit your specific requirements and the needs of your client base.

How can I justify the switch to my clients?

Nobody knows your clients better than you do, which is why your input and oversight is valued and respected at every step. Changing your centralised investment proposition can be justified where it is the right solution for your clients, which only you can assess. In our experience, these solutions are built with client issues at the forefront. Our aim is to make portfolio construction and the switch as seamless as possible.

And as these are solutions that have been created in partnership, with constant oversight, they are intended to keep delivering long term benefits to your clients, including lower costs.

What does the client experience feel like?

Your clients will get an enhanced experience that uses our depth of internal resources to build on what you currently deliver. Together we will work on co-branded client-facing literature that is timely, engaging and relevant. This includes factsheets, quarterly investment reports, ad hoc communications and more.

How will the valuation of my company benefit?

Any money that could be saved from introducing greater efficiencies into your company effectively goes directly to enhancing the valuation of the business. If using the service helps you to save £50,000 in costs, that immediately benefits the company’s bottom line. And of course, the larger the numbers, larger the impact on the firm’s value.

Additionally, an efficient, highly profitable business with a clear CIP would be considered as a high value acquisition, because such companies can be seamlessly integrated into the acquirer’s business model and future growth plans.

Will my adviser firm have access to Blackfinch’s investment team?

Yes. Access to our investment team is critical, especially when we begin designing your tailored solution. The degree of interaction and involvement is determined at the outset. But it’s also an ongoing relationship with the team, via regular investment committee meetings and periodic updates with your clients.

How will this help my advisory firm meet Consumer Duty regulations?

It will help establish your firm is meeting the products and services elements of the Consumer Duty regulation. Advisers need to demonstrate that the products and services they put to their clients have clear benefits to those clients. For advisor firms, having greater ownership of the design of their investment solution is a crystal-clear justification of one of the Consumer Duty’s key outcomes. Another important outcome of the Consumer Duty involves price and value. So, by setting price caps for certain client demographics or groups again shows you’re retaining far greater control over that aspect of the regulation.

Additionally, understanding and support is another critical aspect of the Consumer Duty regulation. We believe that improving the quality and consistency of client-facing communication – delivering timely, high-quality and jargon-free investor content that clearly states the adviser/provider relationship – helps to reduce confusion and increases the understanding of your client base. There’s no confusion between what the adviser does for them and what Blackfinch does.

How long will it take for us build the overall service?

The process starts with you telling us what is most important to you in a CIP. We will begin an active and consultative process that gathers your insights and feedback throughout. After reaching agreement on the service, we move to delivery on the platform of your choice. Building the range can be completed in a matter of weeks, but your involvement is critical to enhancing the proposition to the point where you are comfortable giving your sign off.

Which platforms and risk profilers does the service work with?

In short, any. We believe it’s up to the advisory firm to determine which platform and risk profiler is the best fit for their clients, so we will make it work on that basis. We build a tailored solution to suit you and the needs of your clients, not the other way round.