Schroders expands the model portfolio business into the international market

Wealth management giant Schroders has unveiled Schroder Investment Solutions (SIS) International.

This follows the launch of its Model portfolio solutions business in the UK in 2021.

Schroders is now expanding its operations with an international offering based out of Guernsey for international clients, comprising two model portfolios.

The offering includes active and sustainable models for a range of risk profiles and will be available on three platforms: Novia Global, Morningstar Wealth Platform and 7IM.

The active models will be available in both sterling and US dollars, while the sustainable models will be available in sterling and will then be expanded according to demand.

The models, like the current SIS model portfolios, will be managed by Alex Funk, Chief Investment Officer of Schroder Investment Solutions.

Next Step

radio tells International Advisor: “Looking back to reflect on the launch of Schroder Investment Solutions, the continued growth and the investments we continue to make in financial intermediary solutions, this was the next step for us.

“We will take our onshore model portfolio service, Schroder Investment Solutions, and expand this to an international offering. We will use exactly the same process philosophy and make it available to financial advisors.

“For us, it’s about becoming an extension of the financial planning practice. We become the advisers’ internal investment partner by making them an investment offer.

“What we don’t want to be is just another off-the-shelf product. We are a partner and what we offer is an offer.”

Support

Schroders said SIS’ international offer will also include a provision of adviser support, similar to the UK offer.

Digital factsheets and quarterly reports will be available to advisors, including a quarterly impact report for the sustainable models, to ensure clients are seeing the positive impact of their investment on people and planet and alignment with the United Nations Sustainable Development Goals to understand.

Gillian Hepburn, Head of UK Intermediary Solutions, added: “Good service and support is vital for any financial advisor choosing an investment partner for some or all of their centralized investment proposals.

“The international models benefit from the same service offerings as the UK models, including digital factsheets, monthly updates, quarterly reports including specific impact reports for the sustainable models.”

“Quarterly updates and ad hoc webinars will also be made available, as will a range of support services, including personal engagement.

“We firmly believe that the advisor has full control over the client conversation and in addition to providing a first class investment solution our main focus is to ensure that all advisor/client interactions are fully supported. ”

Sustainable offer

One of the main features of SIS international is the sustainable model range.

Funk added, “When it comes to investments, I think we have a track record of managing these portfolios in the local market and then it’s a matter of taking that same philosophy and applying it to the international space. There are fewer sustainable options on the international market. Our concern is to understand which asset classes and regions are better suited to sustainability investing versus other areas that are better suited to some form of impact investing.

“I think the most important thing in all of this is the coverage. I would say investors want to know what they are investing in. You say to advisors, “You need to achieve my financial results,” but there’s this added mandate, “You also need to do good things for people and planet.” ”

As demand for sustainable products increases in the international market, advisors need to broaden their knowledge of investment strategy.

Hepburn said: “Sustainability reporting is very important to us. The work we have done over the past year with consultants in terms of ongoing training and support we can transfer to the offshore market.

“One of the things we’re noticing now is that many advisors want to dig a little deeper into some of the topics, including the road to net zero and active ownership. While we are still training on a broad basis, there are certainly consultants who want to delve deeper into the topic.”

Price

The models are priced with an administration fee of 15 basis points.

Funk said, “I think when you think about pricing, you have to evaluate it from a business perspective by saying, ‘At what price level can I keep growing the business, we can keep investing and we can keep at a high level achieve service to our customers?’

“Because we have an existing solutions business, we can continue to offer that solution at a price point that we believe adds value to a business.

“When we set our price, we don’t say, ‘We think we want to be the cheapest on the market.’ “We’re going to say at what point we can deliver continuously and reinvest in the solutions business to deliver it,” and that’s really the root of where we’ve gotten from a pricing perspective.

“We want to continue what we offer on the onshore market on the international market. I think it’s important for investors who might invest in both subsets to have continuity rather than differences between these two.”

Expansion of international business

SIS has seen a steady increase in assets under management since launch, currently £4.6bn ($5.3bn, €5.3bn) as at 30 June 2022, up from £4bn since launch in April 2021.

i.a asked the company how global its ambitions were.

Funk added, “We have an existing structure and regulatory licenses in multiple regions so it wouldn’t be long before we had something on. But we would only do it if we knew our solution would yield a result to a problem.

“It’s not just about starting to start. It’s about saying, ‘What’s the problem, what does our distribution look like, and ultimately can we offer a service that meets those needs?’”




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