Planners shifting away from benchmark hugging managers
Financial planners have moved away from mainstream broad cap managers who have clustered around the benchmark and are opting to use specialist managers to generate returns and income according to Hyperion Asset Management managing director Tim Samway.
According to Samway there has been a shift in planner thinking since the introduction of the Future of Financial Advice (FOFA) reforms where planners are becoming more critical of the cost of investments compared to the returns they are generating.
He said planners are no longer using high alpha managers who tend to cluster around benchmarks but are instead looking at exchange traded funds (ETF) or direct equities combined with specialist funds from smaller managers.
"Planners are becoming worried when they see broad cap managers all on the same side of the market and are moving away from them and looking at funds that can offer differentiated investments," Samway said.
"I have heard this repeated in dozens of meetings with boutique and large scale practices, including those aligned with institutions."
Samway said that since FOFA planners have developed a greater inbuilt attitude around the interests of clients and have moved away from inhouse products.
He said planners were looking at products which demonstrated they had thought about the client's needs and interests and were examining how funds blend and how they are protecting investment capital.
"Managers have taken the safety route and planners want quality assets that provide growth which is why they are looking at vanilla investments such as ETFs combined with specialist active managers."
AUTHOR
Staff Writer
Recommended for you
Sequoia Financial Group has announced it is selling off its Informed Investor subsidiary which it acquired in April 2022.
Wealth Data has examined which advice business model has seen the most growth since the start of the year including those that offer holistic advice.
Research conducted by Elixir Consulting and Lonsec has quantified the efficiency gains of using managed accounts in financial advice practices in hours per week saved.
With only one-quarter of advice practices actively seeking feedback from clients, the Financial Advice Association Australia has emphasised why this is a critical tool for client retention.
