Investment outsourcing has soared on the Quilter platform over the past five years amid a “significant” waning in adviser appetite to run their own portfolios, data from the platform has shown.

Outsourced investments in discretionary fund management (DFM) models and managed portfolio services (MPS) at the end of 2020 stood at 16.7 per cent of all platform assets.

In 2025, that figure now stands at 41.9 per cent, with the total value of assets in outsources investments “soaring” by 331 per cent over the same period.

The degree of outsourcing is also likely to be far higher once multi-asset funds are considered too, the platform stated.

Meanwhile, the proportion of assets still managed on an advisory basis on the Quilter platform fell sharply, declining from 28.1 per cent in 2020 to 15.8 per cent in 2025.

The total assets run on an advisory basis also decreased, from £13.9bn in 2020 to £13.4bn in 2025.

Quilter noted that the MPS market had grown “exponentially” in recent years, with fees having reduced at a similar time as advisers lost appetite to run advisory portfolios, particularly after fixed income’s ‘struggles’ in 2022.

Additionally, research from Next Wealth recently found that discretionary MPS assets increased by 36 per cent in the year to September 2024.

“MPS growth in the past decade has been nothing short of phenomenal,” said Quilter head of business development and discretionary sales, Graham Folley.

“In 2014 we had only three discretionary managers with model portfolios on the platform with assets around £350m. That number now stands at 149, representing over 3,000 portfolios and close to £18bn in assets under management, excluding our own WealthSelect MPS.

“Indeed, if you include multi-asset funds under the definition of outsourcing, we have very much reached a crossover point in how the majority of client assets are managed.

“The trend is clear and adviser appetite to administer advisory model portfolios has markedly diminished. Clients and advisers clearly like the visibility of both the activity and the investments that an MPS provides, and coupled with the downward pressure on fees, they are fast becoming the preferred way to implement the investment means of a financial plan.”

However, Folley warned that this visibility needed to be properly interrogated, as the growth of MPS had brought about new and possibly unappreciated risks.

“MPS providers are making greater use of passives to help drive costs lower, but this brings about a latent risk some advisers and their clients are not necessarily aware of,” he continued.

“With the US making up over 70 per cent of the MSCI World index, and the Magnificent Seven around a quarter, some MPS portfolios are concentrated in a small handful of names and may lead to outcomes that cause some clients discomfort.

“Given how this would expose clients in a market downturn, as evidenced during 2022’s fixed income struggles, due diligence of the investments, as well as the operations, of an MPS is more vital than ever.”

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