As regulation intensifies and client expectations outpace the adaptability of most advice businesses, firms must reimagine not only how they deliver financial guidance but how they construct the investment infrastructure that supports it. Speaking at the Investment Leaders Forum INZ in Queenstown, Chris Lioutas, co-CEO of Genium Investment Partners, delivered a clear directive: advice practices must build their investment capability with clarity, alignment and scale, or risk becoming irrelevant.
“Where we’ve come from and where we are now are worlds apart,” Lioutas began. “In the traditional advice practice, investment management was stitched together from house ratings, internal models and a little rebalancing. Clients were mostly pre-retirees or retirees, focused on income and capital preservation, and relatively insensitive to fees.” That model, he explained, has been left behind by a changing environment.
Today’s clients are digital natives, investment-aware and fee-conscious. They want transparency in pricing, tangible outcomes like tax-efficiency and performance reporting, and interfaces that reflect their expectations of modern service delivery. “It is no longer enough to be technically sound,” Lioutas said. “The way you deliver investment outcomes has to align with your client’s values. This is about identity and positioning, not just process,” he said.
The modern adviser, then, faces a fundamental question: how should investment capability be built? Lioutas outlined three viable models for delivering this capability; in-house, partially outsourced and fully outsourced, and stressed that none are inherently right or wrong. The decision must reflect each business’ values, strengths and goals.
An in-house model offers complete control. It allows advisers to build portfolios that match their philosophy and client needs with precision. However, it comes at a significant cost. “You are wearing every hat,” Lioutas said. “Research, governance, compliance, portfolio updates. It is intensely time-consuming, and scalability becomes an uphill battle, especially as adviser numbers continue to decline while demand increases.”
A partial outsourcing model offers a middle path. Firms may adopt model portfolios, bring in investment research partners or share governance responsibilities. This provides some relief from operational pressure, but does not eliminate it. “It gives you some time back and more rigour in your processes,” Lioutas noted, “but you still have to deal with paperwork, oversight and accountability. It is only a partial solution.”
Fully outsourced investment capability is, by contrast, the most scalable and efficient. It enables firms to partner with a specialist to handle the entire investment function. “That allows the adviser to focus on what they do best, strategy and client relationships,” Lioutas said. The trade-off is a perceived loss of control, and for some, a sense of disconnection from their value proposition. “Fee-layering and identity concerns are valid, but with the right partner, they are manageable,” he added.
The decision should never be made on short-term convenience, Lioutas warned. “Adopting a model because someone said SMAs are the only path, or because it solves a problem today, is risky. You need to think in decades, not quarters. Will this decision still serve your business and your clients in ten years?”
Once the structure is selected, the next task is to define a coherent investment proposition. According to Lioutas, that must begin with the advice philosophy. “This is about how you deliver advice and how that ties to your investment approach. If there is misalignment, clients will feel it and outcomes will suffer,” he said.
Advisers must also deeply understand their client base. How much personalisation do they expect? Do they want engagement or automation? What kind of reporting or digital experience are they seeking? “Your client’s preferences should shape every decision you make in building your capability. Ignoring these insights results in disconnect and lost trust,” Lioutas said.
A balancing act exists between efficiency and control. Too much of the former and you lose your distinctive edge; too much of the latter and you throttle your capacity to grow. “Leaning too far in either direction will stunt your practice. There is an optimal middle ground that varies for every business,” he said.
Compliance and risk management must be embedded from day one, not bolted-on later. Technology needs to support not just client reporting, but also rebalancing, governance and operational integrity. Pricing also matters. “Your investment proposition must be sustainable. If your margins are not viable, none of this will work long-term,” Lioutas cautioned.
Looking ahead, Lioutas sketched a clear picture of the investment partner of the future. The right partner will integrate seamlessly into an advice business, aligning with its philosophy, supporting the client experience and adapting to the delivery model rather than forcing structural change. “They should enhance scale without sacrificing quality,” he said. “And they must bring transparency, governance and flexibility. They are not a supplier. They are a partner in every sense”.
Such a partner anticipates problems before they arise, brings deep research to the table, and elevates the adviser’s value in the eyes of the client. “They are not there to replace you. They make you more visible, more scalable and more impactful. That is what makes them a strategic asset, not a cost centre,” he said.
For Lioutas, investment capability should never be an afterthought. It is not just a mechanism for delivering portfolio outcomes, it is central to how an advice business is perceived, how it operates, and whether it thrives in a world of accelerating change. “The investment partner you choose today will shape your practice for the next decade,” he concluded. “Get it right, and you turn a functional decision into your biggest competitive advantage”.