Custom at Scale: What It Really Takes to Run Tailored MPS

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MDOTM. (n.d.). Custom at scale: What it really takes to run tailored MPS. https://www.mdotm.ai/news/custom-at-scale-what-it-really-takes-to-run-tailored-mps

MDOTM hosted an Investment Leadership Event at The Line in London on 1 October, bringing together DFMs and wealth managers to examine what it takes to run tailored model portfolio services (MPS) at scale.
NextWealth data shows on-platform discretionary MPS assets have reached £208bn, growing 32% in a year, more than twice the rate of the overall platform market.
Tailored models account for around 14% of MPS assets, and nearly three-quarters of DFMs offer them.
Average total costs have roughly halved since 2021, with lower-cost and more passive providers growing fastest while hybrid propositions lose ground.
Panellists said demand for tailoring has become structural, as consolidating advice firms outsource investment management but want portfolios that reflect their own beliefs and client service model.
Running models across 20 or more platforms creates a heavy reconciliation burden, and tokenisation was raised as a possible step change that could let a single trade settle across all platforms.
Automating risk-budget rules, rebalancing, and drift monitoring was described as the way to run tailoring at scale, with the winning MPS proposition of five years from now characterised as digital, instant, and well governed.

Knote: Getting the MPS (managed portfolio solutions) industry in the UK automated is a key theme for us in 2027. There is a huge technology gap between the UK and the US in this regard that needs to be closed.