Research contracts up for grabs

Some of Australia’s biggest investment research contracts have changed hands in recent weeks, and there could be more changes in the pipeline.

The research contract for Commonwealth Bank of Australia (CBA) owned dealer groups — including Commonwealth Financial Planning and Financial Wisdom — is currently being reviewed, with the incumbent provider being Standard & Poor’s (S&P).

Protests were made from some corners of the industry last week when S&P awarded CBA-owned Colonial First State Global Asset Management (CFSGAM) top honours in its fund awards, despite CFSGAM not winning any minor categories. A closer inspection of the finalist list shows CFSGAM as the most nominated fund manager across a number of categories — a finalist in four minor categories compared to two by its closest competitors, Tyndall and Schroders.

Another significant contract currently under review is that of ANZ-owned dealer group Financial Services Partners (FSP). The group has around 200 advisers and currently uses research from van Eyk Research, Morningstar and Lonsec. FSP is also understood to be one of the biggest investors in van Eyk Research’s fund of funds product, Blueprint, which contributed significantly to the research house’s bottom line last financial year. Blueprint’s biggest investor is Count Financial — a client van Eyk Research lost to Lonsec late last month.

Wilson HTM is another group reviewing its investment research contract, currently held by van Eyk Research. Wilson HTM head of financial advisory Chris Saunders said the research review was part of the group’s annual review cycle for all external providers. The group is also reviewing its software, platforms and broking relationships.

S&P recently expanded its contract with Westpac at the expense of van Eyk Research.

Unlike Westpac and CBA, ANZ-owned dealer groups do not negotiate one research contract for all dealer groups. ING disbanded its internal research function — Financial Facts — late last year, and had a tender out earlier this year, but rather than seek economies of scale with one provider, contracts were handed out across the research houses. Millennium3, for example, uses Morningstar and Lonsec, while RI Advice Group has its own internal research team, assisted by research from Mercer, van Eyk Research and Morningstar.

The loss of the Westpac and Count Financial contracts at van Eyk were followed by job cuts, including a voluntary redundancy taken by recently promoted head of distribution Michael Angwin and the departure of relatively new research recruit Dr Stephen Garner. The loss of the key contracts appears to have put van Eyk Research behind rival Lonsec in terms of market reach into dealer groups.

Institutions, meanwhile, have boosted their internal research teams over the past 18 months by recruiting former research house executives. Former van Eyk Research head of research Nigel Douglas was recruited by Perpetual Private Clients, while BT Financial Group’s senior manager, research and product, Piers Bolger, was once head of research at Lonsec.