Generate says demand from financial advisers dealing with wealthy clients, trusts and more complex portfolios was behind its decision to launch outsourced investment management service GoCIO.

Generate investment specialist Greg Smith told Good Returns TV advisers had been approaching the manager with client situations that required more investment support than they could provide in-house.

“Advisers are basically coming to us ... with complex client situations, particularly around high-net-worth clients, and trusts,” Smith says.

“At the same time, they’re wanting to outsource the investment function rather than build and maintain it themselves.”

GoCIO is a discretionary investment management service (DIMS). GoCIO head of distribution Simon Leach says it offers access to institutional-grade investment models and a team acting as an outsourced chief investment office for advice firms.

Leach says the service is built around four pillars: access, alignment, economics and enablement. Rather than impose a standard arrangement on every financial advice provider (FAP), Generate wants to tailor the service to each firm’s clientele and requirements.

“It’s about us understanding how every FAP works,” he says. While model portfolios form part of the service, GoCIO can also construct bespoke portfolios for clients with particular needs.

Leach says advisers pay no separate ongoing charge for his support, training or additional material; those costs are incorporated into the DIMS fee. Advisers determine their own client advice fees, with some using tiered pricing and others charging more where clients require greater ongoing attention.

GoCIO is also developing tools to help advisers serve client groups they might otherwise turn away. Leach gives the example of charities needing investment committees, statements of investment policy and objectives, and ongoing investment management.

Smith says outsourcing portfolio management can free advisers to focus on their client relationships. He refers to Australian research suggesting the time saving could approach two days a week, although he says even one day would be valuable.

The service also raises the question of whether GoCIO will favour Generate's  managed funds. Smith says its funds undergo the same assessment as other managers and competitors will be selected when they are a better fit.

“They don’t get a free pass,” he says.

However, Smith argues Generate funds are underrepresented in advice models and says their long-term performance, investment team stability and lack of performance fees deserve consideration.

Portfolio selection is overseen by the GoCIO team, led by chief investment officer Jeremy Ward, who previously held senior roles at Jarden and Alvarium.

Leach says early take-up has been strong, although he does not disclose adviser numbers or assets under management. He expects the trend towards outsourced investment models, already established in Australia, to gain traction in New Zealand.