AJ Bell launches low-cost Managed Portfolio Service for financial advisers

The MPS is aligned with the existing risk profiling tools used by advisers, enabling them to offer their clients a risk-targeted investment solution whilst helping to reduce the regulatory burden attached to portfolio management.

The portfolios

There are five portfolios that target specific levels of risk, each of which have been mapped to the risk profiling tools from Distribution Technology and Finametrica so advisers can easily incorporate them into their existing advice processes.

The portfolios will be run by AJ Bell Investments, the new investment management business that was created earlier this year. They are broadly diversified across asset classes and regions and will be rebalanced quarterly to ensure they remain aligned with their risk targets.

Details of the asset allocation of the portfolios and the underlying holdings are show in Appendix 1 below.

The costs

There is an annual investment management charge for the MPS of 0.25% plus VAT. The portfolios are constructed from passive funds to keep total costs low, giving an ongoing charge figure for the constituents of each portfolio ranging from 0.18% to 0.22%. This means the total cost for the complete investment solution is between 0.48% and 0.52%.

The adviser benefits

The MPS makes it easy for advisers to offer their clients a comprehensive portfolio service without having to manage it themselves, leaving them free to focus on their core financial planning advice. It also helps them meet their regulatory obligation of ensuring the portfolios meet the needs of their clients.

Billy Mackay, marketing director at AJ Bell, comments:

“Advisers’ use of portfolio services has been on the increase since the RDR but the costs and transparency of traditional services have not kept pace with the direction of travel in the market. Our focus has been to build a managed portfolio service that is easy to understand for both advisers and their clients, fits into the existing business processes of advisers and offers their clients a competitive deal.”

Appendix 1

Portfolio asset allocations:

Portfolio breakdown example:

Portfolio 3