Understanding how asset classes can produce uncorrelated returns can be quite technical and requires a very different skillset that not all advisers possess.
It can also take up a huge amount of an adviser’s valuable time.
This is why many advisers may want to outsource these decisions to a specialist firm or manager.
Where does responsibility lie?
But does opting for a multi-asset fund mean outsourcing the responsibility that comes with it too?
Mr Doran asserts it does not remove the responsibility.
“Advisers should work with asset managers who not only have the investment credentials they would expect to see, but who also have a commitment to keeping advisers informed, with clear communication, on what’s happening in client portfolios,” he explains.
He does acknowledge there are some disadvantages to outsourcing to a multi-asset strategy though, which means it may not be the right solution for all advisers and their clients.
“The downside of outsourcing is that it generally removes the ability to create entirely bespoke portfolios based upon the detailed understanding that advisers have of client needs,” explains Mr Doran.
“For some advisers, putting such distance between the asset management and the client’s end investment goal can cause some discomfort.”
But John Roe, head of multi-asset funds at Legal & General Investment Management, believes these types of investment solutions can offer an efficient route for those with more bespoke circumstances.
“Buying a multi-asset solution, rather than building portfolios a building block at a time, uses less resource both in the selection process and also in explaining the recommendations and risks to clients; for a given justifiable spend, that can allow more focus on areas that are likely to add more value, like their attitude to risk and personal circumstances,” he says.
Adviser checklist
While outsourcing can indeed free up an adviser to focus on other demands on their time, there is some due diligence needed in selecting the right multi-asset solution in the first place and then ongoing due diligence once a client is invested.
Mr Roe admits: “Choosing the right multi-asset funds remains an important role for the adviser, as they can differ a lot in terms of risk-taking, return potential, asset allocation, level of active management and costs and fees.”
He continues: “A good approach for choosing which funds to recommend to clients is to identify a set of clear investment beliefs first, based on what has been evidenced to add value to outcomes over the long-term and then use that to narrow down the available funds to a suitable shortlist.
