CO-MANUFACTURING IS NOTHING TO BE AFRAID OF

​Rather than fearing the regulator's focus on co-manufacturing arrangements, forward-thinking advisory firms can look at structured agreements as a way to safeguard their unique investment propositions. Done correctly through open-architecture frameworks, custom mandates ensure that advisors dictate strategy while retaining the power to change out providers. 

By Henry Cobbe, Head of Research, Elston Consulting

Over significant portion of £2bn in AUM managed by Elston Portfolio Management is in adviser-defined Custom mandates designed by Elston Consulting, who are leaders in this field since launching Custom portfolio consulting service in 2018.  Henry Cobbe's idea for this customised approach goes back to 2018 when Elston Consulting launched a Custom Portfolio consulting service for DFMs in a format borrowed from their experience of open-architecture trust-based pension schemes which operate in a similar way for large cohorts of investors.

In March 2026, the FCA announced it would provide an update on the MPS Review later this year.  Any questionnaires sent out to MPS providers are likely as part of this.

The key requirement on co-manufacturing is to have a clear documented agreement outlining respective roles and responsibilities.  Greater documented clarity should come as a surprise to nobody who is doing this properly already.  Understanding, doing and documenting co-manufacturing arrangements is key to what we do.

As we noted in our September 2025 article "Co-Manufacturing: the good, bad and ugly" , the "good" types of co-manufacturing arrangements are open architecture. The adviser defines the strategy, and appoints the investment manager who manages it. The "bad" type are captive arrangements - this is where many adviser firms are accidentally transferring away client value to a manager they can't replace: seems exciting at the time to create JV, but it's a trap.  The "ugly" are arrangements which shouldn't exist where the manager is paying the adviser firm for distribution.

Custom portfolios (which some firms refer to as Tailored or Bespoke MPS), is a key growth area within the MPS market, and will continue to be as advisers focus more on building their own investment proposition, rather than throwing away the keys to third-party managers.

See Henry quoted by Citywire's article on this topic