What is a discretionary fund manager (DFM)?

A discretionary fund manager (DFM) is a regulated investment firm that makes day-to-day investment decisions on behalf of clients without needing approval before each trade. DFMs work within parameters set by your financial adviser. Quorum Capital is a DFM authorised and regulated by the FCA (no. 601037).

What is the difference between a DFM and an IFA?

A financial adviser (IFA) manages your overall financial plan — goals, protection, tax, pensions. A DFM manages the investment decisions inside your portfolio. The IFA sets the mandate (risk grade, objective); the DFM makes the day-to-day investment decisions. Both are regulated by the FCA.

Is a discretionary fund manager the same as a model portfolio service?

Not exactly. A Model Portfolio Service (MPS) is a type of discretionary management where the DFM manages standardised risk-graded portfolios across many clients on a platform. Quorum Capital operates as both a DFM and an MPS provider.

Does a DFM hold my money?

No. A DFM does not typically hold client money directly. Client assets are held by a regulated platform (custodian) chosen by the adviser. The DFM instructs the platform on what to buy and sell within the agreed mandate.

How is a DFM regulated in the UK?

UK DFMs must be authorised and regulated by the Financial Conduct Authority (FCA). They are subject to MIFIDPRU capital adequacy requirements, conduct of business rules, and Consumer Duty obligations. Quorum Capital is FCA authorised (firm reference 601037).

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What is a Discretionary Fund Manager?

A complete, plain-English guide to discretionary fund management — what a DFM does, how it differs from an IFA, and how Quorum Capital fits into your financial plan.

The definition.

A Discretionary Fund Manager (DFM) is a regulated investment firm that makes day-to-day investment decisions on behalf of clients. The word "discretionary" is the key: the DFM has discretion to buy and sell investments without needing to ask for permission before each transaction.

This is different from an advisory arrangement, where the investment manager must seek client approval before every trade. Discretionary management allows faster, more consistent portfolio management — particularly important in volatile markets.

In the UK, DFMs must be authorised and regulated by the Financial Conduct Authority (FCA). Quorum Capital Limited is authorised and regulated by the FCA, firm reference number 601037.

How it fits with your financial adviser.

Most investors encounter a DFM through their financial adviser. The adviser manages your overall financial plan — goals, protection, retirement — and appoints a DFM to manage the investment side. The DFM works within parameters set by the adviser:

Your risk grade (how much risk is appropriate for you)
Your investment objective (growth, income, capital preservation)
Your time horizon (how long your money is invested)

Inside those parameters, the DFM makes all investment decisions. Your adviser stays in control of the relationship and the financial plan — the DFM handles the investments.

What a DFM actually does day to day.

A DFM like Quorum Capital:

Selects funds — chooses which investment funds (equities, bonds, property, alternatives) to hold in your portfolio based on your risk grade and investment objective
Monitors markets — watches for material changes in market conditions, fund performance, and economic outlook
Rebalances — when markets move and the portfolio drifts away from its target allocation, the DFM trades to bring it back in line
Reports — publishes regular commentary explaining what the committee did and why, which your adviser shares with you

Quorum Capital's Investment Committee does all of this for ten portfolios across three ranges — Core (active), Passive (index-tracking), and Income — available on seven UK adviser platforms.

Quick facts: Quorum Capital

Type	Discretionary Fund Manager
FCA no.	601037
Portfolios	10 (across 3 ranges)
Risk grades	RG2–RG5
Platforms	6 (incl. Fundment, Aviva, Fidelity)
Fund affiliations	None (open architecture)
Performance fees	None

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How discretionary management works with your adviser.

How it works →

DFM vs IFA: what's the difference?

These two roles are complementary, not competing.

Role	What they do	Who regulates them	Discretion over investments?
IFA (Independent Financial Adviser)	Holistic financial planning — goals, protection, tax, pensions. Manages the overall relationship with you.	FCA	No — advises on suitability, but typically does not make day-to-day investment decisions
DFM (Discretionary Fund Manager)	Day-to-day investment management within the mandate the adviser sets. Selects funds, rebalances, monitors.	FCA	Yes — makes investment decisions without seeking approval per trade
Platform	Holds and administers the investments (the "custody layer"). Executes trades instructed by the DFM.	FCA	No — follows instructions from the DFM

The three-party model.

When a DFM is involved, three regulated parties each play a distinct role.

You

The investor

You work with your financial adviser, who determines your risk profile and investment objectives. Your money is held on a platform chosen by your adviser.

IFA

Your adviser

Manages your financial plan. Appoints a DFM within the mandate you agreed. Remains your primary contact and conducts regular reviews.

DFM

Quorum Capital

Makes investment decisions inside the mandate. Selects funds, monitors markets, rebalances portfolios. Reports to the adviser monthly.

Platform

The platform

Holds your investments. Executes trades instructed by Quorum. Provides you and your adviser with full visibility of the portfolio.

Why use a DFM?

Consistency

The DFM monitors and rebalances without requiring you to act. Portfolios stay aligned to their risk grade even as markets move.

Expertise

Investment decisions are made by specialists focused solely on portfolio management — not split across financial planning, compliance, and client service.