Nick Heath: Why the smartest planning firms outsource investment management
As published in Professional Adviser, 20 January 2026
Nick Heath explores investment management outsourcing and says business growth actually comes from doing less…
Many financial planners launch their firms with the ambition of providing clients with valuable, tailored advice to guide them through complex decisions that shape their lives.
With trust at the heart of any longstanding client relationship, great planners aim to maximise facetime with their clients. But then life – in the form of the demands of running a business – all too often gets in the way. As client propositions expand to meet evolving demand, it becomes increasingly difficult to maintain service levels.
Over time, firms feel compelled to take on an investment management function, seeing it as a natural progression. However, it comes at a cost, introducing a heavy administrative burden.
It’s not just the upskilling and constant vigilance required to perform at the top of your game, it’s also the constant round of meetings that evaluate risk and are necessary for good governance. It’s not unusual for planners who follow this route diligently to give up months each year to maintain their investment management offering, time that could be invested in winning new business, client relationships or team development.
In our experience, clients want to know if the value of their portfolio has gone up, down or sideways. They typically have little interest in detailed commentary on specific asset classes, often nodding along in meetings out of politeness, rather than enthusiasm. Clients prefer to keep things simple, focusing on outcomes that quality investment management can enable, such as retiring sooner or gifting to their children. This is why the smartest firms we work with are choosing to outsource investment management.
Outsourcing doesn’t reduce control
When it comes to outsourcing, there is a clear misconception among firms that this involves ceding control. Some are deterred by the risk of the relationship with their chosen Discretionary Fund Manager (DFM) breaking down. Others are worried that closely aligning with an individual DFM can lead to significant reputational damage, should things go wrong.
However, outsourcing investment management when it’s done well can actually increase control for firms and provide a platform to deliver a better service for clients. Firms get a better deal compared to keeping the offering in house, gaining access to stronger governance, specialist oversight, and a more consistent client experience. If trust is an issue, firms can also establish a direct line of communication into the investment team.
Outsourcing done well brings discipline, structure and specialist oversight to an area that regulators are scrutinising more closely than ever. And if you can get it right, it should also be cheaper than the costs associated with doing it to the same standard inhouse.
Investment management is becoming a regulatory risk
As markets become increasingly unpredictable, with sharp changes of direction driven by a volatile regulatory landscape, the case for outsourcing continues to grow. The Financial Conduct Authority has set out clear expectations around Consumer Duty and the need for firms to provide value for money, with those who fall foul of these requirements risking severe financial consequences and reputational harm. It’s had a profound impact on the way that firms perceive investment management.
Our most recent Financial Planning Growth Index Report revealed that planning firms view regulation as one of the key threats to their future growth prospects. Regulatory compliance was cited by 29% of planning firms as their principal worry, the highest proportion of all the industry challenges surveyed. Managing portfolios in-house might feel bespoke to clients, but if the governance and execution are not watertight, it can quickly become a costly liability.
It really is not a question of competence. Many advisers are perfectly capable of managing portfolios. The question is whether the time, energy and resources required to keep up with the growing regulatory burden represent the most efficient use of their time.
Growth comes from doing less
The best firms we work with understand that to succeed, they need to be really clear about where they add the most value. If you understand that, you can then focus ruthlessly on what you are best at.
It’s the foundation stone of great strategy and executing against it well is likely to deliver the best results.
As an example, a firm we worked with was spending a combined 75 days each year running model portfolios, with two directors and three admin staff tied up in a process that added little strategic value to the business. Once they outsourced, everything changed. One director doubled down on growth and acquisition, quickly building a £600m pipeline, while the other re-focused on team development and operational improvements.
With this in mind, any firm wondering whether it’s time to hang up its investment management hat may already have reached a decision. The firms that thrive over the next decade will not be the ones doing everything. They will be the ones choosing what matters most and doing that exceptionally well.
That is how firms grow: not by doing more, but by doing less better.
Nick Heath is head of relationship management at the Saltus Partnership Programme