DFM

Question 1

Advantages of using a DFM (6)

Answer 1

• if will ensure diversification of asset classes
• less admin
• managed in line with clients objectives / ATR
• will ensure tax allowances and exemptions are used efficiently
• potential for outperformance
• access to a wider range of funds
• easier reporting to the HMRC

Question 2

Disadvantages of using a DFM (6)

Answer 2

• higher charges
• loss of day to day control
• may not outperform
• could incur CGT charges if equity holdings are sold
• may invest in areas client is unhappy with / outside ethical preferences
• client may be unwilling to sell shares / emotional attachment