Centralised investment propositions are like model portfolios that can be expressed as a suite of products from which the client can choose, or the advisor can choose for them. These can be:
- Multi-manager/multi-asset: one manager – or collection of managers – does the diversification for you across asset classes, regions, sectors, etc. Usually these are classified by risk target such as 6-8% volatility, 8-10% volatility, etc. Or they can be classified by equity allocation, e.g., 10-30% equity weight, 30-60% equity weight, 80%+ equity weight, etc.
- Advisory: here, the wealth manager might pay for a service to recommend them model portfolios based on inputs that reflect client requirements etc. The portfolios could be like the above, but the money sits on account with the wealth manager as opposed to being sent to an external manager’s custodian.
- Discretionary: here, the wealth manager could be building and running the model portfolios themselves. Again, they would preferably have a suite of products so that they can tailor to different clients.
- Fully outsourced: usually, the funds are given to one manager who then does a combination of multi-asset, discretionary and multi manager investing. This is probably the lowest touch from the wealth managers point of view
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