In his recent Citywire article, Mike Morrow, Chief Commercial Officer at Parmenion, explains why informal arrangements are no longer enough for financial advisers and how co-manufacturing, when done well, can unlock innovation, scale, and better client outcomes.
Read the full article below.
Financial advice is evolving. As client expectations rise and regulatory standards tighten, the way we design and deliver investment solutions is under the spotlight. The FCA’s Consumer Duty has brought a renewed focus on outcomes and, with it, a sharper definition of how firms work together.
One area that has come into clearer view is co-manufacturing, which now carries clearer responsibilities under the Duty. For advisers, platforms, DFMs, and tech providers, understanding what co-manufacturing means – and how to do it well – could unlock new opportunities. So how do we define what we mean by co-manufacturing, why is it so relevant right now, and how could it unlock better outcomes for clients?
A quick recap on co-manufacturing
The FCA defines co-manufacturing as a situation where two or more firms collaborate to design and bring a product to market, each having a material influence over the features or distribution – and, consequently, your clients’ outcomes. This is different from the traditional manufacturer-distributor model.
If your firm helps shape the investment strategy, define the target market, or influence pricing, you’re likely a co-manufacturer. And that means shared responsibility for ensuring the product delivers fair value and meets client needs. Roles and responsibilities can vary – every co-branding collaboration is different, but the key takeaway is the same: if you’re influencing the design or delivery of a product, you’re also accountable for the outcome.
Why does it matter now?
Co-manufacturing isn’t new. Advisers have long worked with DFMs on white-labelled portfolios, and platforms have co-developed tools with fintechs. But the Consumer Duty has raised expectations. Informal arrangements won’t cut it anymore. Firms that are part of the distribution chain must now evidence what part they have in delivering good outcomes, with clearly defined roles and responsibilities. The FCA expects written agreements that set out how co-manufacturers will meet their obligations – from product governance to ongoing oversight. This is particularly relevant for advice firms shaping more bespoke investment propositions or developing their own digital journeys. If you’re influencing the design, you’re partly responsible for the outcomes.
Renewed clarity brings new opportunity
When done well, co-manufacturing can help advice firms to develop new innovations, bring scale, or grow an advice business. Choose the right partner, and you’ve got the chance to use your own expertise, creativity, and flair alongside some of the best brains and experience in the industry.
For example, in the world of MPS, advisers can co-create bespoke, co-branded portfolios with DFMs that reflect their investment philosophy and client segmentation. These partnerships allow for greater personalisation while maintaining operational efficiency.
In the world of platforms, technology providers and advice firms are integrating custody into other advice tools and services to streamline the on-boarding, enhance the investor reporting, and reduce costs for everyone involved. Co-manufacturing enables firms to collaborate while aligning incentives and sharing accountability.
At its best, co-manufacturing leads to better client outcomes – more relevant solutions, clearer communication, and stronger governance. But only if roles are clearly defined and responsibilities are owned from the start, and then throughout the customer lifecycle.
So here are three practical points to keep in mind if you’re considering co-manufacturing:
1. Be clear on the risk you're taking
If you’re influencing product design or distribution, you’re likely a co-manufacturer. Make sure your governance, oversight, and controls are robust and reflect that. Don’t sleepwalk into regulatory responsibility.
2. Understand which regulated activities you're taking responsibility for
Co-manufacturing can blur regulatory boundaries. Make sure you have the right permissions and seek legal and compliance input early. Don’t assume your partner is covering all the bases.
3. Communicate clearly who is doing what with clients
Clients need to know who’s doing what and who’s accountable if something goes wrong. Your disclosures, documentation, and client conversations should reflect the shared nature of the proposition.
Co-manufacturing is more than a regulatory label; it’s an opportunity to collaborate in a complex, client-focused world. When approached openly, it can unlock innovation, scale, and better outcomes by bringing the best of minds together, but firms must keep Consumer Duty and their shared responsibilities front of mind.
Co-manufacturing with Parmenion
We recognise that no two financial advice firms are the same. That’s why we offer flexible co-manufacturing partnerships that give you the freedom to deliver investment management in a way that suits you, and your clients. Our flagship Affinity is a powerful investment partnership designed to add value, reduce business risk, save time, and reinforce your brand.
Find out more about Affinity here, or for more on our wider partnership offering, click here.
This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity.
Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
