Mason Stevens chief executive Thomas Bignill said financial advisers are increasingly looking to mimic the strategy and service offering of fund management professionals.
“We see a lot of evidence of advisers expressing interest in creating their own model portfolio, but when push comes to shove, nine out of 10 don’t and end up with a managed fund because they realise just how difficult it is, and the time commitment you need,” Mr Bignill told the 13th annual Wraps, Platforms & Masterfunds conference.
Mr Bignill said advisers are better positioned to add value as “asset allocators” and should leave portfolio construction to investment managers, rather than “sitting in front of a screen working out whether their clients should buy BHP or Rio”.
“There are always going to be those advisers that specialise in stock picking but on the whole I think you need to be very cautious of that and we will see less and less of that,” he said.
The comments came during a panel discussion on the rise of direct investment in which netwealth chief executive Matt Heine agreed that “financial planners are becoming fund managers”.
Do you think advisers can add value as stock pickers/investment managers? Have your say below.
For large cap allocation why not? Its mostly a Beta play. Shares held directly in a clients name are superior on a tax basis cf a unit trust, + reliable franked dividends enable income planning. Compare to Unit Trusts- inherit pool tax & [i]hope [/i]for a distribution, & paying 3-5x in fees.
Of course if anyone is going down that road, save time & buy an ETF or LIC, same effect, 18-20bps pa.
Sometimes can even buy the LIC at a discount to its NTA- Free money.
Then spend that saved time finding new clients or serving those you have.
Probably “not following through” because time poor doing paperwork & compliance.
Disclosure: I work for an LIC
Financial Planners should be what they want to be and carve out their own niche. Some will be great Fund Managers while others will be terrific asset allocators and mentors. Who cares, let the free market decide.
A financial planners job is not to pick stocks, funds or markets.
It is to manage the clients behaviour and ensure objectives are met.