Our origins and purpose
A DFM Built by IFAs for IFAs
In 1995 Wills & Trusts, a fairly new independent financial advisor (IFA) firm based in Buckinghamshire, started to actively manage investments for their clients simply because it could not find an investment manager that either understood them as an IFA, or understood the IFA relationship with their clients.
Over the years, the founder David Batchelor, a Fellow of the Chartered Insurance Institute (CII), started to share the Wills & Trusts approach to investing, known at the time as the Advanced Investment Strategy (AIS), with other IFAs.
To better support Wills & Trusts’ clients, the firm established its own Discretionary Fund Management (DFM) service in 2018, giving clients a simpler way to benefit from managed investments. At the same time, it still gave their clients the thing they valued most about their relationship with Wills & Trusts, an unrivalled style of client communication.
Many IFA firms that followed the AIS came together in 2022 to take the concept of a collaborative DFM further.
The result is Trust DFM. A DFM built by IFAs, for IFAs.
What makes Trust DFM different?
Created to provide high quality investment products and service to the clients of financial advisers, investing with Trust DFM is simple and straightforward via an existing investment platform. Meaning we can transform the investment strategy, without having to move or transfer any assets.
We believe in the importance of high-quality financial advice. Therefore, we partner with carefully selected financial advisers who are seeking an investment manager that can provide them with the tailored investment services they require to meet their clients’ needs.
We understand that clear and straightforward communication is the key to building a long-lasting trusted partnership with a financial adviser, which is why we pride ourselves on our unique and relatable communication style.
Good performance is something that everyone expects, and so for a DFM to be outstanding it must go further than simply good performance, and this is where an IFA focused DFM is so different from the competition.
And this is how we do it…
Most model portfolios are designed purely to meeting a specific level of risk.
While risk appropriateness is a particularly key factor of any investment strategy, a portfolio built like that, to us, means that the reason WHY a client is investing gets forgotten. That makes no sense. No client has ever asked for investment advice because they want to be a medium-risk investor. But every client has a goal for the investment they are making, be it saving for retirement, supporting a grandchild through school or university, paying for their child’s wedding, taking the holiday of a lifetime, or simply leaving an inheritance for their loved ones. They all have needs, hopes, and dreams that they are asking for help to achieve.
A 30-year-old building their pension pot could easily be assessed as having the same risk tolerance as a 65-year-old who is drawing an income. But that is no case for having the same investment portfolios! One needs income, the other does not. One needs capital stability to support withdrawals, where the other needs elevated levels of volatility to generate long term growth possibilities and to benefit from ‘pound cost averaging.’
To us, it makes more sense to focus on the reason why the client is investing and design an investment model to support objectives, across differing risk levels. We would leave the proper combination of those two things to the adviser who understands the client and their circumstances best.
Only an IFA-centric DFM would provide a structure to allow this type of investing, and we do this with our propriety Asset Allocation Tool (or PEG, as we like to call it!).
PEG runs on most large devices and supports you, the IFA, in a discussion with your client about their investment objectives, as well as their risk tolerance and capacity for loss. The outcome of this discussion provides you both with a provider-neutral, market-average asset allocation for the clients’ identified risk tolerance, on screen and in a pdf report. You can choose to end your session there and use the results with any provider you consider suitable.
If you’re considering using the Trust DFM models for your client, you can continue to the next stage where PEG combines the clients’ objectives with their risk assessment in a simple graphical interface. This clear visual overlay allows the client to understand the relationship between their objectives and risk, and we’ve found that for some, this is the first time they have clearly understood how risk exposure affects the possibility of them achieving their goals.
Now you can have a real conversation about risk, one that educates and motivates the client to action.
Who really understands ESG (Environmental, Social and Governance)? Do you? Does your client?
In the investing world the terms ESG, and ESG investing, have become almost mainstream over recent years and so it’s easy to forget that not everyone spends as much time thinking about investments as we do! So, it’s not unusual to find a client sitting with you who doesn’t really “get” what ESG means, is, or does.
Part of our communication support is aimed at increasing the knowledge of our users about the areas we work in, and so we like to think that we’ve put together a wide range of useful and easy to access literature that helps users of varying experience levels understand the basics and some of the complexities behind the ESG label.
Read our articles on ESG and Investing here.
With all the noise around the topic, we took a long time thinking about how we could convey what we were aiming to achieve with our own ESG investments. We also considered how we could present this to the world in a way that could be immediately understood and embraced by anyone who was interested in it.
Therefore, we built The Attenborough Scale®.
In his book ‘A Life on Our planet’ Sir David Attenborough talks passionately about his love of the natural world and his sadness at seeing unrestrained capitalism lead to the deterioration of almost all types of flora and fauna globally.
He specifically addresses key areas that we must focus on to save our planet and restore it to its former glory, and by doing so, we protect our own species and our future. He shares the work of economics professor Kate Raworth, who has designed an economic structure to protect the planet, called ‘Doughnut Economics.’ It is these key factors and structures that Trust DFM has used to build its Sustainability range. The question we asked ourselves is, “how much like David Attenborough do we want to be?” And we invite you to ask yourselves that too!
We understand that not everyone is ready or equipped to invest exclusively in this way at every point in their investment journey and so we’ve developed The Attenborough Scale®. This allows you to guide your client to a combination of standard and sustainable investments that is right for them.
All of this functionality is built into PEG, to make conversations simple and straightforward with clients. But most importantly, it helps you genuinely work with the client to get a personalised portfolio that fits all aspects of their investment needs and helps them to understand the links between choices like this and the investment outcomes they could experience.
How many times have you seen the client glaze over while reading their bi-annual review? Then they bombard you with questions about the terminology, or the message they might have preferred to hear a couple of months ago?
Wouldn’t it be better to have updates more regularly? Pieces that are fit for a variety of knowledge levels, that can educate or reassure them about headlines and economic matters as they happen. Messages that are short and to the point. Might it be an innovative idea to add video messages, so that the clients can actually see and hear from the people managing their money? Wouldn’t it be great if you, their IFA were on the video?
This is our approach.
Through our IFA roots, we know that client communication is the key to a great relationship. To us, this means delivering communications that are prompt, jargon free, simple without being simplistic and in a format that clients can relate to and enjoy.
Each quarter we deliver a written and video update, describing our market views and what has been happening to shape that outlook. These various formats allow you as the adviser to select the best and most appropriate content and method for your client communications. You can send these as you received them, or, as most of our partners do, you can ‘top and tail’ the videos with your own content. This can build understanding and loyalty within your client relationships. Our interim messages usually come whenever something newsworthy happens, say a surprise interest rate hike, or a Prime Minister resigning, as well as when we feel we have something of interest to share about the investments we all hold.
The final part of our communications support is delivered via our quarterly in-person sessions, where you as an advisor and others from your business will be invited and could speak directly with peers, business coaches and investment specialists to develop your own skills and to gain insight and ideas that you can take away and implement yourself.
Who makes decisions about your client’s money? It’s doubtful the clients know, or even you as an adviser knows who’s directly managing your client’s money. At Trust DFM, you’ll have the chance to meet and speak with all the Investment Committee, and so can your clients, via video updates and in answer to any specific questions that may be raised.
Trust DFM’s Chief Investment Officer is James Sullivan. More info about the James and the rest of the committee can be found here.
IFAs don’t compete with each other. You might compete with St James’s Place, or Hargreaves Lansdown, but not with other IFAs, so why not get together and share best practice?
Trust DFM runs the Business Development Network (BDN) for approved IFA firms. To attend you will need to be approved by the existing IFAs using Trust DFM. Once approved you will benefit from:
- Quarterly owners’ meetings, where issues of the day are discussed, and best practice is shared.
- Quarterly Adviser meetings. Those who advise clients can attend these sessions to talk about the best approach with clients when it comes to a wide range of topics or products. We might discuss estate planning and the Inheritance Tax (IHT) rules, pension transfers both Defined Benefit (DB)and Defined Contribution (DC), obtaining referrals, overcoming objections, or dealing with risk, just to name a few examples.
- Quarterly Paraplanner meetings. Too often paraplanners lack exposure to peer groups or to new industry ideas or practices. This meeting changes all of that.
- Quarterly investment committee briefings. How many DFMs will invite you and your technical and adviser team to a personal briefing with the actual people managing the clients’ money? How valuable would this be to you and your team when you need to explain investment decisions to clients.