“I’ve probably been guilty of over-explaining the reasoning behind it, and sharing our research in too much depth,” he says. “I noticed at certain points that clients’ eyes would begin to glaze over.”
Similarly, shrinking portfolios is not a straightforward move, as those advisers seeking such a shift have already discovered.
“We haven’t pulled the trigger on the switch just yet as we needed to be sure we could execute a change for every client if that’s what they wanted – part of our treating customers fairly requirement,” says Mr Hall.
“If we dealt with these switches at each client’s annual review, for example, we could be disadvantaging those clients who we are not due to see for the next 11 months or so.”
For Mr Buttercase, the problems have also been logistical in nature. The fact that clients tend to have bespoke, idiosyncratic arrangements means that reducing fund numbers will take time. Other barriers, such as emotional attachments on the client side, can also stand in the way of progress.
“Every client has a historic fund legacy,” he notes. “They may be attached to a fund because it has done well. I can’t just press a button and everything changes.”
Any appetite?
Practicalities aside, any such shift will also depend on the willingness of advisers to take the leap. For some intermediaries, the idea of cutting down provokes mixed reactions.
Rowena Griffiths, chartered financial planner at Female Financial Management, is yet to seriously consider the idea. This is in part because she has not experienced extra pressure as a result of Mifid II reporting, but also due to past experiences with concentrated portfolio positions.
She explains: “I have had my fingers burnt in the past by putting 100 per cent of a client’s UK asset allocation into one fund, such as M&G Recovery, which went through a long period of underperformance. If a large percentage of a client’s assets needs to be in one asset class, I always diversify,”
Ms Griffiths concedes she could consider greater use of a single product if it provided its own diversification – as funds can do in the multi-asset space. But this approach can create fresh problems.
“I am quite keen on Royal London’s Governed portfolios, which are fairly low cost and well diversified,” she notes. “The only problem with putting all of a client’s money in this is that their perception of your independence can be questioned.”
