In the financial planning industry, the correlation between the success or failure of a research house and the popularity of their software and product offerings is getting increasingly closer.
Since October 2000, ACNielson.consult has been documenting the opinions of financial planners who use the Internet regularly to gauge the popularity of the different research sites. The survey showsMorningstar’s research software success has waned over recent years, leavingvan Eykto pick up the slack, reflecting not only general market perception but market share as well.
For the year ending October 2001, the results show Morningstar producing the most popular research site, followed byAssirt, van Eyk andInvestorWeb. But by October 2002, the same survey named van Eyk as the most popular research site, with Assirt remaining second and Morningstar dropping to third place.
These results echo theMoney ManagementRating the Raters Survey, which over the last two years has shown fund managers also giving van Eyk a solid thumbs up over its rivals for research and ratings credibility.
So what is it about research software that wins financial planners’ hearts, and more importantly, subscription fees?
According to Graham Rich, director of Brillient!, quantitative and data analysis capabilities of Assirt, van Eyk, Morningstar and InvestorWeb are very similar, leaving much of the distinction between the groups to qualitative information, style analysis and portfolio construction.
The ACNielson.consult survey shows ‘credibility’ is the most important characteristic of a research site, closely followed by online availability. Of the financial planners surveyed, 50 per cent ranked credibility as the most important factor in a research site, and voted van Eyk Research as the market leader in that area.
Over the two-year period to October 2002, the planners flagged InvestorWeb as the best in terms of online availability, with Assirt and van Eyk close competitors for second place. InvestorWeb was also the clear leader in terms of timeliness, the fourth most important factor in the overall popularity of the research sites. But Rich ranks Assirt and van Eyk as “by far the most prolific in terms of flow of information”.
“[Van Eyk’s] iRate is very regular, every Friday night. Assirt is similarly prolific, a consistent but random flow as they complete each piece of work.”
And, according to the survey, Assirt’s offering also contained the widest range of services, followed by van Eyk and Morningstar, with InvestorWeb bringing up the rear.
“IDT[Investment Data Technologies] and InvestorWeb are relatively similar, in that if you are a financial planner with significant hands-on work in analysis of information, or if you are a dealer group researcher, you may find that they are not substantial enough from a research perspective. Here the research capability is almost like an add-on, included as part of a financial planning package,” Rich says.
“Lonsechad a similar genesis in that it came from financial planning software [now Visiplan], but over the past 18 months has really started to stretch out.”
In terms of research, Rich says Lonsec and van Eyk have the greatest breadth and depth of information.
“They look at more than just funds, they look at other sectors like equities, alternative investments, and agribusiness as well.”
While the survey rates Assirt as the leader in terms of range of services available, Rich sees the software and web capability of both Assirt and Morningstar as more narrowly focused on funds.
In terms of value for money, InvestorWeb came out on top, while Assirt’s second place led to a significant drop to van Eyk and Morningstar, but Rich says van Eyk is often seen as a premium organisation because of its product offering.
“In terms of analytical tools, van Eyk is way out front, and in terms of breadth and depth of research, van Eyk is the benchmark. And if van Eyk is the benchmark in terms of breadth and depth, then Lonsec is the up and coming research house,” he says.
“Van Eyk will have to manage its diversification so it doesn’t end up losing out. Assirt, with its new staff and re-engineered form, will also be going forward in different ways with different strengths and weaknesses.
“I see van Eyk, Lonsec and Assirt as the three primary providers in the future, with InvestorWeb and Morningstar having nowhere near the same likelihood of success going forward. They are the three that are delivering and will continue to deliver the best service,” Rich says.
But the quest for research software perfection is far from over, and as increasing numbers of planners turn to the Internet and while technological advances continue, the competition will only get stiffer.
“[All the research houses] have different strengths and weaknesses, but in my opinion, as a set of tools, none of them has got the mix right yet,” Rich says.
