While discussions regarding the right licensee and technology providers is relatively commonplace with the advice community, Stuart Fechner, Bennelong Funds Management head of research house and asset consultant relationships, said there are a number of important considerations when selecting a research house.
For instance, Fechner noted that research houses can differ significantly in their approach to analysing funds, with some leaning more on qualitative data and models, while others will place more emphasis on qualitative factors such as the experience and philosophy of the investment team.
“It is essential for advisers to recognise that research houses vary in their approaches to assessing investments and fund managers,” he said.
“Advisers need to investigate deeper than just the fund ratings and consider the underlying methodologies used by research houses, the range of services offered and the overall fit with their business.”
According to Fechner, the types of clients the practice services should also be a key consideration in this regard, as “different reports and structures will resonate with different clients”.
Although the basis of research houses is their fund rating services, Fechner explained that, depending on the needs of the practice, additional service offerings, such as asset allocation guidance and tools for building model portfolios or managed accounts, may be a deciding factor.
“While noting the key and core item of a research house is in providing fund ratings and reports, differences exist in terms of related services, information and systems that may be available,” he said.
“Some potential clients may only seek or only need a pure fund rating and reports service, while others may find items such as asset allocation insights or advice regarding building model portfolios or managed accounts valuable to their needs and circumstances.”
Fechner added: “It is as important to understand your own needs as it is in understanding what is provided by a research house and the ‘how and why’ that sits behind it. Being on top of both sides of this equation will go a long way in helping to provide an outcome that will add value to an adviser’s business.”
When it comes to assessing a research house’s suitability, he said there are seven key questions advisers should be asking:
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What is your investment philosophy and research approach?
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What are your points of difference and competitive advantages?
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How frequently do you review and update your information and reports?
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What is the range of services, information, reports and tools you provide?
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Do you offer flexible subscription options or a complete package?
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How does access/subscription work, and is it limited to specific individuals?
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What are your fees and cost structures?
“At the end of the day, it’s about marrying up your own needs and client base with what a research house does and can provide, so that your overall offering and service to your client base is improved,” Fechner said.
