If the shift to a fee-for-service model does come into play next year as part of the Government’s Future of Financial Advice (FOFA) reforms, it is expected that listed investment companies (LICs) will reap the benefits.
Research analyst at Bell Potter William Spraggett said the change in legislation would put LICs on the radar.
This is mainly due to the fact that the new model will mean financial planners are paid just as much for recommending LICs as they are for more expensive managed funds.
In turn, this could see discounts between the share price of LICs and their net tangible assets (NTA) narrow as more money pours into the sector, and it is expected that advisers and their clients will follow suit.
“I think they will tear away in the new environment,” Spraggett said.
