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Institutional DFMs – an excellent solution for retirement funds

23.10.2019
By RisCura

With the aim of ensuring fair outcomes for financial customers, South African regulators are advocating for a greater separation of financial advisory and investment management activities. Consequently, financial advisors are increasingly partnering with Discretionary Fund Managers (DFM).

DFM services are not only useful to advisors for their retail clients — they’re also an excellent solution for advisors with institutional clients like retirement funds. Every retirement fund is unique, with a distinct member profile and benefit regime that often requires a customised investment strategy. Institutional DFM services focusing on retirement funds allows advisors to provide appropriate advice to their clients leading to better outcomes for retirement fund members.

An institutional DFM offers a single, integrated service tailored to advisors with retirement fund clients that includes strategic and active investment management, while removing the routine hassles of administration, reporting and governance. It provides the investment expertise ordinarily only available to large retirement funds, and requires a different skillset than that of a retail DFM providing the same service to individuals.

With an institutional DFM, the process begins with a thorough analysis of the retirement fund’s needs and goals.  In conjunction with the advisor, an investment strategy for the client is developed and an Investment Policy Statement formulated.

Advisors can provide clients a solution whereby the often difficult and time-consuming task of choosing, managing and monitoring asset managers is delegated to the institutional DFM, which implements the investment strategy by investing the retirement fund’s assets into a managed portfolio of investment products.

Ongoing portfolio management decisions can be made by the institutional DFM on a discretionary basis and executed promptly to optimise performance and manage risk effectively. The daily monitoring and management of a client’s portfolio by a coordinated team of multi-disciplinary professionals provides the advisor and their retirement fund clients peace of mind that their assets are invested with care.

The institutional DFM provides the advisor with a comprehensive toolkit that the enabled them to engage productively with their clients. The toolkit includes market insights and portfolio positioning,  and risk and performance reporting. Additionally, retirement fund clients are provided with a suite of reporting services including investment accounting and regulatory reporting to cater for their auditing and statutory compliance needs.

With an institutional DFM, economies of scale apply, such as being able to negotiate better fees with investment managers. This enables the institutional DFM to charge for all the above  services, inclusive of asset manager fees at a highly competitive rate.

By partnering with an institutional DFM, advisors are empowered to service their institutional clients professionally, offering expert solutions that benefit advisors, retirement funds, ultimately retirement fund members.

– David Potgieter
Delegated Investment Services, RisCura

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  • RisCura is a global financial services firm with more than $200 billion in assets under advice and reporting. We partner with institutional investors across emerging markets, bringing specialist investment management, advisory, and analytical expertise to help clients make informed, long-term investment decisions.

    Guided by our “Invest with Care” philosophy, we recognise that investment decisions are not only about money and numbers, but about the people and futures they affect. Through tailored solutions, deep research, and a client-centric approach, RisCura helps investors navigate complexity, manage risk, and create lasting value for their beneficiaries.

    RisCura is known for its focus on liability-driven investing, responsible investment practices, investment transparency, reliable valuations, independent risk assessments, performance standards, and long-term investment outcomes.

    Our capabilities span investment advisory, investment management, investment analytics, institutional platform services, and alternative investment services. Across these areas, we combine consistent methodology and proprietary tools with deep local insight, recognising that each market is unique while responsible investing remains universal.