Wilson Asset Management (WAM) chairman and portfolio manager Geoff Wilson told ifa that the ban on trail commission has led to a “significant” impact on adviser sentiment.
“Two years ago we’d only be speaking to a couple of financial advisers,” Mr Wilson said.
“Now there would be 20 odd that we communicate with and who communicate with us. It has significantly grown.”
“My view is that LICs are at the start of a golden decade.”
Mr Wilson said most of this interest is coming from the non-aligned and independent adviser markets rather than bank aligned advisers.
He added that part of this up peak in sentiment is due to FOFA’s ban on commissions has putting LICs on equal footing to the managed fund market.
“The introduction of FOFA with the levelling of the playing field from getting rid of trailing commissions- that’s really been a driver for a lot of financial planners to look at LICs, ETFs and listed shares,” Mr Wilson said.
“LICs have been a major beneficiary of that.”
“We’ve seen that over the last couple of years a lot of financial planners have changed their business model and with the potential loss of the trailing commissions and more of a fee for service have looked at LICs … because they actually are a superior investment vehicle for a portfolio of shares.”
You need to be careful attributing causal relationships on the evidence of correlations. Using direct equities of any sort compared to managed funds is a big business shift for some practices. The absence of commission may not be the driving factor. Many IFAs haven’t accepted trail commission for years but perhaps have woken up to the administrative advantages of dealing direct.