In our report published in July, we found that smoothed funds are used by 35% of financial advisers for new client money – more than use annuities  (32%), and behind multi asset funds and discretionary model portfolio services at 59% and 48%.

NextWealth’s first Smoothed Funds Proposition and Distribution Report provides a detailed and comprehensive view of the market, comparing provider propositions,  smoothing methodologies, platform access, pricing and adviser sentiment.

The research compares the views of adviser users and non-users of smoothed funds and finds sharply polarised views.

Those who recommend smoothed funds say they play an important role in client portfolios for low risk/cautious clients and retired drawdown clients, mitigating sequence risk. Those who don’t cite higher costs, concerns about transparency and problems explaining the smoothing mechanism to clients.

Main growth opportunities for providers

The report identifies two main areas of potential growth for smoothed fund providers:

• Converting non-users – particularly advisers already recommending annuities or those using multi-asset funds.

• Expanding share of wallet with existing users – over half of advisers who use smoothed funds do so for 10% or less of client assets. Some have inherited these assets, while others recommend then for very risk averse clients.

Cost is still a barrier

Charges continue to act as a barrier to wider adoption among users and non-users. The report finds that the ongoing charges figure (OCF) for smoothed funds ranges from 0.58% to 1.37% – significantly higher than the average total cost paid by advised clients for funds (0.31%) or for discretionary model portfolios (0.54%).

About the Smoothed Funds Proposition and Distribution Report

This report offers a comprehensive view of the smoothed funds market, combining:

• A survey of 200 financial advice professionals (June 2025)
• Interviews with 8 investment decision-makers at advice firms
• Data and input from 4 leading smoothed fund providers
• Comparative analysis of propositions, smoothing methodologies, platform access, pricing, and adviser sentiment

Mark Aldous, Senior Quantitative Researcher at NextWealth