The majority of UK IFAs now outsource some of their client portfolios directly to a third-party manager, despite the fact that most are concerned about the threat this may pose to their core client relationship, new figures from Investec Wealth & Investment reveal.

The firm found that 60 per cent of advisors now outsource, and that on average these IFAs outsource 27 per cent of their portfolios to between two and three discretionary fund managers and two platforms. This figure is set to rise further too as we near the implementation of the regulator’s Retail Distribution Review at the start of 2013: 58 per cent of advisors said they plan to up the number of portfolios they outsource ahead of the deadline.

However, making the decision to increase outsourcing is far from unproblematic for advisors, the survey found.

Having asked which factors influence their choice of discretionary fund manager, Investec found that having the assurance that their client relationship would not be threatened was the most important factor to advisors. Second came investment process and third was the discretionary fund manager’s ability to provide bespoke portfolios.

Next were: track record of funds; total expense ratio; a proven track record of having successfully worked with IFAs; online reporting procedures and strength of brand. Interestingly, size of total assets under management was deemed the least important factor, suggesting that it is not necessarily the biggest players which will benefit most from the trend towards outsourcing.