Managers call researchers on conflicts
Fund managers have delivered a strong rebuke to research groups which diversify into investment management, with over 80 per cent claiming the move creates serious conflicts of interest.
The finding is one of the key results from Money Management’s latest Rating the Raters survey, released today.
The provision of implemented consulting services (57 per cent), operating platforms (49 per cent) and offering model portfolios (46 per cent) were also seen as creating conflict for a research house.
The survey examined the views of 40 investment management groups, with over $370 billion in funds under management.
Each respondent was asked to rate both the research industry as a whole, as well as individual researchers, on areas such as research methodology, transparency of ratings, quality of personnel and fees.
Around 65 per cent of respondents also felt that paying fees to research houses for reviews could compromise the ratings provided.
However, over 80 per cent of respondents had paid such a fee in the past. Not surprisingly, 65 per cent of fund managers were also reluctant to pay to use a rating in marketing material.
When asked to rate the overall ability of the various researchers, managers gave the highest scores to three groups — Lonsec, van Eyk and Mercer.
In terms of independence and ability to keep ratings free from conflicts of interest, Morningstar scored highest, with 46 per cent of respondents rating it good or excellent, followed by Mercer and Lonsec.
Recommended for you
After seven years at the company, Iress’ chief technology officer for wealth management APAC, Anthony Gerrits, has departed as the firm commences a search process to fill the role.
With advice firms thinking about scaling up in 2025, research has detailed the main avenues financial advisers say they have used for successful recruitment.
The board of Insignia Financial has reached a decision regarding the possible acquisition of the firm by US private equity giant Bain Capital.
Six of the seven listed financial advice licensees have reported positive share price growth in 2024, with AMP and Insignia successfully reversing earlier losses.
