I joined Nucleus in April 2019 to lead IMX, which we subsequently launched in 2020. As we start the new year, now is as good a time as any to reflect on running a managed portfolio service. 

    A big part of what we've done with IMX is apply institutional methods to a retail problem. And coming from a background of designing investment strategies for institutional clients, I've been well placed to do this. But as a newcomer to the adviser sector, I've had a whole lot more to learn over this period. 

    Here's a summary of five lessons I've learned since launching and running a managed portfolio service.

    1. Clients' needs come first

    Ok, so this first one is a bit of cheat as it is more of an affirmation than a lesson learnt. I spent a lot of time in my first few months at Nucleus going out and meeting advisers. Despite every adviser firm having different philosophies and taking different approaches, it was hugely refreshing to find that in every case, achieving clients' objectives came before any product consideration. 

    As IMX is a proposition designed entirely around delivering client goals, it was really important for us to ratify this approach with our adviser audience. And this is only going to become more important with the proposed FCA Consumer Duty putting more scrutiny on how services are delivering customer outcomes.

    2. Financial advice is so much more than investments

    This is another one that may be obvious to the reader. However, coming from a technical investment background, it was easy for me to view investments as the be-all and end-all. But it quickly became clear to that an adviser's job is so much more. Investments are a tool to help people lead the life they desire with advisers providing the crucial behavioural coaching and guidance throughout the investment journey. 

    So in designing and delivering IMX, it's really important that the service compliments financial planning and enhances advisers' processes, rather than being the focus. 

    3. Complexity is a killer

    This was some great advice given to me by a former Nucleus board member. I definitely heeded the advice, although at times we've still been guilty of prioritising the theoretically correct answer rather than fully considering how easily this will be understood by advisers, and more importantly, explained to their clients. It's a balance, of course, but we need to continually remind ourselves to boil down complex subjects to their key components in order to drive the right outcome.

    4. Past performance still trumps

    Ultimately, advisers want an investment proposition that outperforms (and therefore delivers better client outcomes). And when introducing IMX to advisers, it's never long before we're asked what the past performance is. However, I do feel there is too much reliance on past performance in the industry when making investment decisions. Especially over short periods where over 1, 3, and even 5 years, chance plays too big a role in investment returns to come to strong conclusions on underlying skill of a manager.  

    Important factors when assessing an investment proposition should also include the underlying investment philosophy and process, evidence for the approach, and a strong governance framework. My lesson here is to recognise the importance of past performance but to always position with these other factors, and importantly, the ability to align and measure investments with the achievement of client goals.

    5. This industry is noisy

    My last reflection is one of the biggest things I've noticed since being in advised retail industry – it's noisy and frenetic! There's no shortage of conflicting strong opinions, new product launches, and upcoming regulations. It can be difficult to cut through the noise to understand what’s true progress and what really matters.

    But in the same token, it’s an exciting time in the industry with so much innovation and advancing technology. We’ve positioned IMX for the future of financial planning, and we'll use our experience to continue delivering and evolving a solution that ultimately helps deliver better outcomes for advisers' clients. 

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