How research house competition is cutting licensee costs
Financial planning dealer groups are finding at least some cost-savings resulting from the exit of the major banks from the wealth management space, with competitive pressures mounting between the major funds management research houses and driving down prices.
Money Management is aware of competition for at least two major financial planning research mandates where the prices being quoted by research houses are more than 30% below what they were three years’ ago.
At the same time, independent investment consultants such as Evergreen have complained about the competitive behaviour exhibited by some of the major ratings houses.
Evergreen founder, Angela Ashton said that in recent months she had witnessed behaviour that some people might describe as “unethical”.
“What I am finding is that they are doing what they can to grow market share in a market which has decreased in size with the exit of the major banks,” she said.
SQM Research founder, Louis Christopher said that he had observed competitive pressure in a market that was already price-sensitive and in circumstances where few of the ratings houses could be said to cover the whole market.
“The research landscape has changed dramatically,” he said.
A senior licensee executive told Money Management that not only were the prices being quoted around the research mandates on offer more competitive but the level of add-ons and servicing had also increased.
“There seems to be a lot of tension in the market as they pursue the remaining significant mandates,” he said.
In Money Management’s most recent Rate the Raters research, Morningstar emerged as the best-regarded research house among financial advisers, followed by Lonsec and then Zenith.
Lonsec continues to have significant private equity ownership, while Zenith Investment Partners has been owned by private equity for more than a year. The other significant players in the research space are Morningstar, Mercer and SQM.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
