Japanese shun need for advice

Japaneseinvestors are stubbornly ambivalent to the provision of financial advice, according to US-based research firm Cerulli Associates, meaning Japanese advisers are continuing to find it hard to make a profit.

Although the Japanese marketplace has a strength of retail funds that would normally spawn the need for advice, Cerulli says investors have typically bought into retail funds when seeking a secure investment, similar to a deposit account.

The research house says that in many cases there is no conscious decision to participate in active asset management through seeking advice.

Independent financial advisers have yet to make an impact in the marketplace according to Cerulli, despite the increasing number of financial planners, now numbering approximately 120,000.

Cerulli says that few of these professionals earn their primary salary by providing financial advice, as many are just employees of banks or insurers required to have better knowledge of investment products.

Some investors are starting to appreciate financial advice more as markets have deteriorated, Cerulli says.

The research house says that the private banking sector is one area where professional advice is increasing, with banks actively training professionals for this market segment.

Cerulli Associates expects that greater product awareness on the part of ordinary investors, especially in the context of newly introduced defined contribution schemes, is expected to accelerate the trend towards greater provision of financial advice.

Attempts to charge for advice so far in Japan have come through managed account programs according to Cerulli.