Lonsec on top for second year in a row

As part of the annual survey, fund managers were asked to rate industry research houses across areas of methodology, transparency, communication and influence.

The final results of the survey showed Lonsec had edged ahead of its six competitors, with fund managers pinpointing performance ability, and influence as key reasons for Lonsec’s top ranking.

The majority of managers believe Lonsec’s overall performance outranked its competition with 50 per cent of managers rating the group’s ability to perform as good.

A further 25 per cent of managers agreed on Lonsec’s winning formula, stating the performance of the researcher was excellent, a figure well above last year’s results. In 2006, Lonsec scored a vote of 19 per cent excellent.

Level of influence was also an area where managers praised Lonsec, with 58 per cent believing that the researcher was the most influential in the industry.

Lonsec also rated highly among managers in terms of influence on a manager’s own business inflows and outflows, with 71 per cent cementing Lonsec as the most relevant player in the research marketplace.

In terms of independence, Lonsec rated in the middle of the pack with 32 per cent of survey participants rating positively their ability to remain independent and free of conflicts of interest, while 44 per cent said the group’s position on remaining unbiased was good.

Managers also placed the level of experience of Lonsec’s research team at the higher end of the scale, with 17 per cent of participants believing the group’s depth and experience of research personnel was of excellent standard, while 48 per cent deemed them good.

Yet while Lonsec rated highly in most categories, the researcher fell down in the eyes of managers with its turnaround time in delivering product ratings.

Close to half of the managers surveyed said Lonsec’s ability in this area was average, while 26 per cent said the group fared well and only 4 per cent believed it had excelled.

Lonsec general manager, research, Grant Kennaway, puts his group’s good result down to focusing on the delivery of consistent quality research.

“Lonsec is very focused on delivering research for financial planners, they’re our core client base and we’re trying to produce consistent quality and timely research,” Kennaway said.

While admitting he is part of a highly competitive industry, Kennaway said his group maintains this focus through Lonsec’s research team.

“As a business you’ve got to be adequately resourced to make sure you can do that [maintain focus], and we’ve got a large and experienced research team and that holds us in good stead in the work that we’re trying to deliver.

“We’re always trying to enhance the research offering. But I think we’ve remained true to label in the research we try and produce, we’ve added resources for structured products,” he added.

Other industry players to achieve strong results from fund managers were Standard and Poor’s (S&P) and Mercer.

The survey findings placed S&P second, with 67 per cent of respondents believing it delivered a good overall service.

Managers positioned Mercer in third after labelling its general capabilities as 20 per cent excellent and 45 per cent good.

“[This result] is very encouraging and a reward for many of the things we have been doing consistently over the last couple of years; a commitment to the market for the long-term through seriously investing in people [so that now] we have one of the largest teams in the market, in the technology that we’re employing in our business, and in our criteria, where we have customised a global criteria for the Australian audience,” S&P head of fund ratings Mark Hoven said.

Hoven said his group’s “relentless focus” on improving its service; and keeping lines of communication open to fund managers and financial planning groups together contributed to its good result.

“The other thing we have done is focus on our key strengths — demonstrated by the sale of our fund data business to Morningstar in the last couple of months, so we can focus on ratings and consulting work. I think that’s absolute proof we are true to that statement,” he said.

Commenting on the feedback from fund managers on the sale of Morningstar, Hoven said: “It has generally been positive. It’s probably less of an impact on them than it is on the financial planning groups.

“I think planners and managers alike understand that’s the decision we’ve made and are a little indifferent to which data service they were receiving.”

Though it seems outside of getting feedback on their business dealings, Hoven said managers are commenting on Standard and Poor’s distribution.

“[In the manager’s feedback to us] it has generally been less about the work we are doing in the funds review work and more about commenting on our distribution.

In other words, how many financial planning groups are using our distribution, and we have seen over the 18 months we have been doing those surveys that we have now made significant progress in building our distribution.”