threesixty enhance free portfolio service for IFAs
threesixty, the fee-based IFA support provider, is enhancing its asset allocation service with the addition of two ranges of model portfolios, enabling IFAs to provide a complete advisory service from risk profile analysis all the way through to underlying fund selection.
The two ranges are being launched following feedback from IFAs who said that they wanted help from a reliable and expert source in streamlining the process by which they put together portfolios for clients.
The enhanced service builds on the asset allocation tool created in conjunction with actuary firm AKG, which threesixty launched in November 2007 on IFA concerns over the impartiality of such tools supplied by some product providers.
The two new ranges have been designed to match five attitude-to-risk (ATR) profiles, including Defensive, Cautious, Balanced, Moderately Adventurous and Adventurous that have been developed by threesixty and for which AKG already provides model asset allocations.
One of the new ranges of model portfolios has been constructed by investment research consultancy Old Broad Street Research (OBSR) and the other by multi-manager house Margetts. The portfolios provide the percentage breakdowns for asset classes as well as recommendations for the underlying funds covering a variety of holdings and styles. They are not benchmarked against broad indices or sectors because this is not appropriate to the objectives of risk-based portfolios: they aim to meet client suitability and risk profile requirements over the long term.
Margetts’ portfolios will add a tactical asset allocation overlay, whereby the Margetts Fund Management team will increase or decrease exposure to certain asset classes and investment sectors, depending on where opportunities and risks lie in the medium to short terms. OBSR will select funds to match the asset allocations recommended by AKG. As such, the Margetts portfolios are likely to change more often than the OBSR portfolios and the portfolios can be expected to differ considerably at any given time.
Key features of the portfolios going forward include:
• The portfolios will be reviewed on a quarterly basis and the current portfolios will be displayed on threesixty’s website
• Each holding will be monitored against an expectation of performance and if the expectation is not met or exceeded by a significant margin then it is reviewed
• Full rationales behind the selection of funds will be provided together with an explanation of changes at each update
• Both OBSR and Margetts will issue ‘red alerts’ in the event that an urgent adjustment to the portfolios is required, for example on the loss of a leading fund manager
• Both Margetts and OBSR will treat the portfolios as funds and they will be valued every quarter. The valuations will assume that switches take place at the review dates so will not necessarily be accurate measures of actual performances at client level
David Ingram, Partner at threesixty, commented: “There are other model portfolios available but we’ve gone further as this service allows IFAs to take their clients all the way through from assessing attitudes to risk with detailed wordings through to recommending specific underlying funds on a dynamic basis.
“This service meets all the requirements of treating customers fairly, enabling IFAs to outsource strategic and tactical asset allocation to genuine experts while selecting funds on a whole-of-market basis. It is yet another example of threesixty adding value to our offering to our IFA clients and keeping them up to date with regulatory changes.”
The model portfolios are provided free of charge to threesixty clients and they can be accessed on threesixty’s website by its IFA clients. The funds selected can be accessed through most platforms.
threesixty may launch the model portfolios as OEIC funds once a critical mass has been reached in terms of assets under management. This would reduce the administrative burden on IFAs and make the switching of underlying funds more cost-effective, as well as give the opportunity to make use of institutional funds.
Toby Ricketts, Managing Director of Margetts, said: “threesixty has a very good understanding of the difficulties IFAs can face when building investment portfolios for clients. They have put together a range of useful tools and solutions to help their members in this area. We have enjoyed working with a highly professional organisation and believe that the model portfolios will provide an excellent investment solution for many clients backed by research from the award winning Margetts Fund Management team.”