By: Pat Magadla, Head of Distribution, and Mersey Booysen, Head of Operations at Equilibrium
Discretionary Fund Managers (DFMs) play a vital role in managing investment portfolios, allowing advisers to focus on client relationships and business growth. But what makes a DFM truly successful? And what are the key ingredients for building a winning partnership between DFMs and advisers?
The foundation of a successful DFM is building trust through exceptional service and operational excellence. Advisers need a DFM that is readily available and responsive to inquiries. Timely responses demonstrate respect for the adviser’s business and builds trust.
A strong operational capability within a DFM is essential. Without a robust infrastructure, consistently delivering on service, reporting, and portfolio management promises would be impossible. DFMs should offer comprehensive reporting capabilities, including standard monthly factsheets, quarterly reports, and asset flow reports. Additionally, flexibility in providing bespoke reports caters to the specific needs of each adviser. In-depth reporting empowers advisers to effectively manage clients’ exposure to DFM portfolios and facilitate meaningful client communication. DFMs can streamline an adviser’s workflow, allowing them to dedicate more time to client relationship building and strategic planning.
Building strong relationships is a key success factor. A shared investment philosophy and mutual respect form the foundation for a long-lasting partnership. Open and transparent communication fosters collaboration, leading to the development of solutions that prioritise client needs. A DFM that fosters open communication, respects advisers’ expertise, and actively seeks feedback, creates a fertile environment for collaboration. Ultimately, a successful DFM partnership strengthens the adviser’s value proposition.
However, success goes beyond “soft skills”. A diverse and experienced investment team within a DFM allows for a wider range of perspectives and a more robust discussion process when making investment decisions. This diversity fosters creativity and innovation, ultimately leading to better investment outcomes for clients.
Markets and client needs are constantly changing, and successful DFMs must be adaptable. They understand the adviser’s specific context and tailor their services to address those needs. By offering a range of model portfolios aligned with various investment goals and risk tolerances, DFMs empower advisers to deliver optimal solutions for their clients investment goals.
When selecting a DFM partner, advisers should conduct thorough due diligence. Key areas of evaluation include the DFM’s investment research capabilities, portfolio construction expertise, and historical performance. The DFM’s manager research team should also be well-versed in both domestic and global asset managers.
The success of a DFM hinges on exceptional service and a strong operational capability within a DFM is essential. Adaptability and a commitment to understanding evolving advisers and client needs are crucial for navigating the ever-changing investment landscape. Ultimately, an established, well-oiled DFM can deliver on its promises and support advisers in achieving their client-centric goals. This is what transforms a DFM from a service provider to a trusted partner in an adviser’s practice.
At Equilibrium, we have a different, human approach to collaboration and establishing long-term reciprocal relationships. Equilibrium becomes your practice’s investment management team and an extension of your practice.
To find out more about Equilibrium and how we bring improved balance into your financial advice practice, visit eqinvest.co.za.
Equilibrium Investment Management (Pty) Ltd (Equilibrium) (Reg. No. 2007/018275/07) is an authorised financial services provider (FSP 32726) and part of Momentum Group Limited, rated B- BBEE level 1.
