Navigating the Process of Outsourcing your Investment Proposition Geoff Balzano CEO,...
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Transcript of Navigating the Process of Outsourcing your Investment Proposition Geoff Balzano CEO,...
Navigating the Process of Outsourcing your Investment Proposition
Geoff BalzanoCEO, Morningstar/OBSR
Brief for today’s workshop
Financial planners who do not want to outsource the investment management function are using model portfolio solutions to provide suitable investment advice to a range of client profiles. The session will discuss how well this works in practice and identify the main advantages and drawbacks for both clients and advisers
•The range of services available
•DIFs - distributor influenced funds
•In-house or out of house portfolio design
•The due diligence process - assessing performance and service quality
•Allocating clients to the appropriate portfolios
•Fund selection strategies - active, passive or both
•Model portfolios vs. discretionary fund managers and other solutions
Agenda
• The Outsourcing Decision• Outsourcing Options• Discussion: How to make the best decision
The Outsourcing DecisionHigh
LowYour firm’s relative capability
High
Invest to perform
OR
Outsource
Perform and Develop
OR
Outsource
Outsource
Outsource
OR
Keep internal
A Case Study
The Investment Process
Operational Platform
• Administration • Reporting • Dealing • Tax Wrappers
Customer Assessment
Strategic Asset Allocation
Tactical Asset Allocation
Fund/SecuritySelection
Portfolio Construction
Maintenance/Review
Outsourcing Options
• Multi-Manager Funds• Return-based
• Risk-based
• Model Portfolios
• Asset Class Models + Fund Panel/Select List
• DFMs
Evaluating your options
• Break into 4 groups – Multi-Manager, Model Portfolios, A/A + Panels, DFM
• Answer 5 questions:• What are the pros and cons of outsourcing using your approach?
• What type of adviser firms are ideally suited for your approach?
• What type of consumers are ideally suited for your approach?
• If you could ask an outsourced partner of your type just five due diligence questions, what would they be?
• What skills/responsibilities need to exist within the firm to support this outsourcing option?