The ABCs of using a DFM in an advice-led world

By Imraan Jakoet, Head of Invest at Graviton

Enhancing your clients’ financial wellbeing while also ensuring efficiency in your own advisory practice is a key balance in any adviser journey. Discretionary Fund Managers, or DFMs, are fast becoming an essential business partner for advisory practices as they complement and enhance the world of an advice-driven financial planner. This article explores the advantages of DFMs, highlighting their benefits for financial advisers and their clients.

What exactly is a DFM?

Essentially, a DFM acts as an asset manager and will manage clients’ investments. This means that advisers have more time to spend with their clients on advising them, coaching them, and ensuring their goals are aligned to a long-term strategic financial plan – rather than spending time researching funds.  DFMs can also build tailored portfolios and solutions to meet specific client investment goals. In addition, they can assist the adviser meet regulatory and compliance requirements.

Given how complex the regulatory and investment environment has become, this is particularly beneficial to today’s adviser.

Key benefits of partnering with a DFM

• More time to advise clients: By engaging with the DFM to take care of the research and portfolio management functions, advisers have more time to focus on existing clients and acquire new ones.
• Specialisation: Advisers can select to work with a DFM that specialises in a particular asset class or one that works across all asset classes. The specialists within the DFM will continuously monitor market trends which means the adviser doesn’t have to. They will review portfolios regularly and will make adjustments accordingly, to optimise the investment outcomes over the long term. Partnering with a DFM such as Graviton also means that the adviser benefits from the scale of the larger Sanlam business. Some of these benefits can, in turn, be passed on to investors. Designing portfolios that are tailored to specific risk profiles – using a consistent investment management process – helps ensure client’s investments are aligned to their goals.
• Regulatory and compliance oversight: As mentioned above, DFMs can also help advisers navigate the complex regulatory environment.
• Reduced administration: DFMs also provide reporting on the investment portfolios, further streamlining the adviser’s administration. A DFM aligned to a larger group may have sophisticated reporting and even AI solutions not available to a smaller advisory practice.

Benefits to investors

Investors whose financial adviser works with a DFM will benefit from access to risk-profiled investment solutions, expertise of specialised asset managers, competitive pricing that comes with increased scale, clear reporting on their investments, and of course the peace of mind that comes from spending more time with their financial advisers.

The Graviton advantage

Graviton offers advisers more than just a DFM capability.  We offer both advice and investments, meaning that advisers form part of a network and can benefit from the full value proposition – with the ultimate benefit being more time to spend with their clients.  Access to quality advice is critical, as is aligning with the right partner for your business.

As mentioned previously, we’re able to benefit from Sanlam’s scale which means lower costs on investment products. We’re also able to offer solutions to other adviser practice necessities, such as succession planning.

Ultimately, it’s all about meeting client’s investment needs.

Partnering with a Discretionary Fund Manager can provide significant benefits for both advisers and their clients. By leveraging the expertise, efficiency, and resources of DFMs, advisers can enhance their service offerings while giving clients access to tailored investment strategies and risk management. The partnership can also help advisers to remain competitive and deliver on their clients’ long-term strategic financial plans.

Contact us for more information on this topic.

Disclaimer: Graviton Financial Partners (Pty) Ltd is an authorised financial services provider in terms of the Financial Advisory and Intermediary Services Act,2002. While every effort has been made to ensure the reasonableness and accuracy of the information  contained in this document (“the information”), the FSPs, their shareholders, subsidiaries, clients, agents, officers and employees do not make any  representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability  for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance  upon the information. The information in this document has been recorded and arrived at by Graviton Financial Partners (Pty) Ltd (FSP) Licence No. 4210 in good faith and from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to its accuracy, completeness or correctness. The information is provided for information purposes only and should not be construed as rendering investment advice to clients.