"It's been interesting that hardly a week goes by without a DFM that I've never heard of coming up on the radar," he says.
"[It] speaks to innovation and change in the marketplace. If you go back 10 years or even less than that...there was a view that DFMs are all a bit active and charging too much money, but that's not the case anymore.
"If you want cheap as chips DFMs you can find plenty of those. If you want to focus on price, if you want something that's focusing on passive you can get that, or active or blended or some other dynamic."
He points to a "massive change" in the cost of DFM services over the past few years, which is a priority for many advice firms post-consumer duty, according to FE Fundinfo.
Almost a fifth of advisers told FE Fundinfo the consumer duty had changed what they looked for in a CIP or MPS, with a greater focus on value-for-money investments and further scrutiny on fees.
Cook says whereas model portfolios cost between 30 and 40 basis points not that long ago, now they are available for less than 10 bps.
But he notes current prices might mean the market has reached the bottom of what it can offer.
"If you're not happy with seven or eight basis points for a model portfolio then you're never going to be happy with price for a model portfolio," he says.
On the flip side, the more expensive bespoke DFMs might face a challenge in evidencing their value to existing clients under the consumer duty, notes Cook, predicting there could be some shifts in assets towards MPS models.
Though he adds that the value of new business coming in "will probably more than compensate them for that change".
Mass customisation
The next stage of development in the market, Cook believes, is highly customised model portfolios, or mass customisation.
This will be helped by technology, as more DFMs use algorithmic models, which will allow for that individualisation, he says.
"Once IFAs get their heads around that, I think we'll see the uptake of that to be pretty significant."
This could see advisers opting for an MPS but putting certain exceptions in place, such as to avoid certain equities or stop trading once a capital gains threshold is reached.
Standard Life, now Abrdn, had already allowed such customisation through individual managed accounts on its Wrap platform in 2019.
Alastair Black, head of savings policy at Abrdn, says it had "a small number" of DFMs using this capability at present but could see demand for this growing.
