Advisers review value proposition
|
|
More financial advisers are looking to add value to their clients through bespoke services and products, according to Instreet’s George Lucas.
The boutique fund manager said advisers have shown a renewed interest in structured products that can more readily be tailored to specific needs.
“There is a renewed interest in bespoke trades,” said Lucas, “whereas previously advisers were happy to buy off-the-shelf, wrap-type products.”
He said this is happening because advisers are once again building trust with their clients and seeking to add value through tailoring services and products.
Lucas agreed that the failure of products throughout the global financial crisis (GFC) has made it a lot more difficult for fund managers to communicate the value proposition of their products and services.
“Saying that, there are advisers that are trying to differentiate and add value for their clients — they don’t just want to offer a balanced funds-style service,” said Lucas, adding that structured products not only have the benefits of capital protection but can also access to investment areas that retail investors would not easily find exposure to otherwise.
David Wright of Zenith Investment Partners agreed that while there is a renewed interest in structured products, it is from a very low base and the range of available products is a lot more limited.
“We have seen particular dealer groups go to banks and structured product providers with a wish list of the type of product that they are looking for, and then the provider has gone away and tried to structure that for them,” he said. “But they tend to be smaller capital raisings — $5 to $10 million — which, in many instances depending on the provider and what they are trying to structure, is not economical.”
He added that while previously structured products provided exposure to other areas, it is less of an advantage now as retail investors have more access to assets or strategies that were historically not available to them. However, Wright said, a positive outcome of the GFC is that structured products are generally much simpler, in that the underlying asset is basic and understandable and the fee structures are more transparent.
Lucas said that there is also a renewed adviser interest in direct equities, which some see as another means of adding value for their clients. Wright said this trend is worrying — although expected.
“Having experienced a number of market downturns previously — albeit none as severe as the GFC — this always happens,” said Wright. “A lot of advisers lose faith with the fund managers and active management, and believe — in many cases wrongly — that they can manage client exposures better themselves through direct equities. In our experience there are very few that have been able to do that successfully.”
Recommended for you
The strategic partnership with Oaktree Capital and AZ NGA is likely to pave the way for overseas players looking to enter the Australian financial advice market, according to experts.
ASIC has cancelled a Sydney AFSL for failing to pay a $64,000 AFCA determination related to inappropriate advice, which then had to be paid by the CSLR.
Increasing revenue per client is a strategic priority for over half of financial advice businesses, a new report has found, with documented processes being a key way to achieving this.
The education provider has encouraged all financial advisers to avoid a “last-minute scramble” in meeting education requirements prior to the 31 December 2025 deadline.
