Planners who participated in the Money Management survey this year decided that Lonsec, which has gone through a number of changes over the last few months, still offered the highest value as a provider of funds research and ratings.
However, the survey also found that the overall sentiment of financial planners had slightly shifted since last year, resulting in lower ratings across the board.
Lonsec managed to confirm its lead, winning again across the same four categories as last year when it received the highest score for its website and tools, asset allocation research, model portfolio and value for money.
Additionally, the firm also topped the table for its corporate strength, quality of staff, client service and won the overall rating category. In total, Lonsec was named a winner in eight out of ten categories.
At the same time, Morningstar was voted the top performer as a provider of fund and fund company research while Zenith was rated as the top research house for its consulting services.
FUND AND FUND COMPANY RESEARCH
This year the fund and fund company research category was voted again by financial planning groups the most important criterion, with more than 90 per cent of them describing this category as either ‘very important’ or ‘essential’ when choosing a fund research provider.
Additionally, financial planners were particularly concerned this year about the breadth of the universe of funds the research houses covered. The second part of Money Management’s 2018 Rate the Raters survey also found that a small number of planners said that the coverage of selected asset classes such as alternatives, exchange-traded funds (ETFs) or separately managed accounts (SMAs) was quite limited in their opinion.
Across this category, Morningstar emerged as the winner, climbing up from the third position last year, as it managed to attract either ‘excellent’ or ‘good’ ratings from 64 per cent of planners who participated in the survey. The company was also praised for being a ‘high-quality research provider’ and delivering an ‘unconflicted research output’.
Morningstar was closely followed by Lonsec, which saw 15 per cent of respondents rate the firm’s research capabilities as ‘good’ with another 48.5 per cent of respondents rewarding it with an ‘excellent’ rating in this category.
Following this, last year’s winner Zenith was pushed down to third place, with close to 61 per cent of a combined ‘excellent’ or ‘good’ rating.
However, less than 30 per cent of respondents granted a similar rating to Mercer this year.
WEBSITE AND TOOLS
This year’s survey found that ‘website information and tools’ was the second most sought-after criterion in research houses for financial planners, with 47.5 per cent of them admitting it was an ‘essential’ feature while another 40 per cent said it was ‘very important’.
Lonsec managed to confirm its top position across this category, grabbing the gold trophy for the third time in a row, having been rewarded this time with either ‘excellent’ or ‘good’ ratings by close to 70 per cent of the financial planners participating in the survey. However, this represented a significant drop in positive feedback for Lonsec compared to last year when the firm attracted a rating from 88.2 per cent of respondents.
Additionally, this year’s survey proved that the gap between Lonsec and silver medallist, Morningstar, had further narrowed and both research houses saw slightly lower ratings. The proportion of respondents who gave Morningstar an above average rating went down to 69.2 per cent from 72.2 per cent last year.
Zenith came third again and followed the trend of dropping ratings with only 52 per cent (69 per cent in 2017) of planners describing the company’s website and tools features as either ‘excellent’ or ‘good’.
This category focused on the quality of staff employed by the research houses and considered factors such as the average level of professional experience among employees as well as staff turnover.
According to the survey, the quality of staff was one of the three most important factors for financial planners in a decision-making process, with 40 per cent of them citing the staff quality as an ‘essential’ criterion and a further 42.5 per cent stating that it was ‘very important’.
Although Lonsec finished marginally ahead of its competitors in this category, with 36 per cent of planners who rated the research house describing the quality of its staff as ‘good’ and a further 24 per cent stating it was ‘excellent’, the survey found that Morningstar and
Zenith, which both claimed second place, came very close to Lonsec.
The quality of Morningstar’s staff was assessed by 48.1 per cent of respondents as ‘good’ and by 11 per cent as ‘excellent’ while Zenith saw 25.9 per cent of planners participating in the survey believing that its staff were of a ‘good’ quality with another one third describing them as ‘excellent’.
At the same time, Mercer earned a combined ‘good’ and ‘excellent’ rating from 45.5 per cent of planners who shared their views in the survey.
With 82 per cent of planners who participated in the survey believing that client service was either ‘essential’ or ‘very important’ criterion in their selection process, Lonsec topped the table although it received a lower rating than Zenith did to win last year.
This year’s top research house scored a combined ‘excellent’ or ‘good’ rating from only 53 per cent of participants who rated the firm. As a result, Zenith was pushed one notch down the ranking and saw around half of the planners participating in the survey admitting that its client services were of above average quality. By comparison, Zenith last year managed to attract similarly positive feedback from almost 77 per cent of respondents.
Morningstar ended on par with Zenith and also experienced a drop in ratings of either ‘excellent’ or ‘good’ for client service from 55 per cent last year to less than 52 per cent this year.
VALUE FOR MONEY
The value for money category saw little change this year, with Lonsec confirming its top position across the category for the third time in a row.
However, the study showed that compared to last year all the research houses across this category received reduced ratings.
Lonsec’s combined ‘excellent’ and ‘good’ ratings went down from 76.6 per cent last year to 60.6 per cent this year and Zenith, which came second this year, saw its combined ‘excellent’ and ‘good’ rating plummet from 61.5 per cent a year ago to 56 per cent in the 2018 survey.
Also, Morningstar followed in the footsteps of Zenith and Lonsec, delivering a smaller number of respondents who generated positive feedback when evaluating the value for money the firm offered.
According to Money Management’s survey, the proportion of planners who assigned Morningstar either ‘excellent’ or ‘good’ ratings dropped from 50 per cent last year to only 37 per cent in 2018.
When it came to rating the corporate strength of each of the research houses, the financial planner groups voted this year in favour of Lonsec, which returned to the top spot, as it earned the highest score of combined ‘excellent’ and ‘good’ ratings with 70.6 per cent.
Lonsec won this category in 2016, however, last year it was pushed down by Mercer which received strong support from financial planners.
Although Morningstar maintained its second position, it saw only 67 per cent of respondents who had used its services this year rating the firm’s corporate strength as either ‘good’ or ‘excellent’. By comparison, the 2017 Rate the Raters dealer and financial planning groups’ survey showed that over 80 per cent of respondents rated Morningstar’s corporate strength in these two categories.
Mercer fell to third place this year and saw 61 per cent of participating planners rate its strength as either ‘excellent’ or ‘good’.
Similar to last year, Zenith remained at the bottom of the ranking as only 57 per cent of planners in the survey assessed its corporate strength as above the average, with a further 36 per cent describing it as average.
ASSET ALLOCATION RESEARCH
The asset allocation research category, which focuses on the resourcing, value-add and methodology employed by raters, was viewed as either ‘essential’ or ‘very important’ by 62.5 per cent of respondents this year.
Lonsec again proved to be a top performer and the company managed to distance itself from competitors across this category.
In 2017, Lonsec’s asset allocation research capability was viewed positively by more than 75 per cent of the financial planners voting in the survey. This year, however, this number dropped to below 60 per cent, with 57.6 per cent of planners assigning the company a combined ‘excellent’ and ‘good’ rating, the survey showed.
It was followed by Zenith, which received similarly positive feedback from around 54 per cent of planners who shared their opinions with Money Management this year.
Following this, Morningstar landed in third spot again while its share of positive feedback, a combined ‘excellent’ and ‘good’ rating, went down to only 42 per cent of respondents, a figure that was much lower compared to 56 per cent a year before.
This year’s survey found that Lonsec, which won this category in previous years, had given up its top spot to Zenith this year.
According to financial planning groups, consulting services offered by Zenith were rated as either ‘excellent’ or ‘good’ by close to 60 per cent of respondents (57.7 per cent).
At the same time, Lonsec, which came second, saw less than half of respondents granting it either ‘excellent’ or ‘good’ ratings across this category. This meant that the number of planners rating Lonsec’s consulting services as above average fell from over 70 per cent last year to only 48.4 per cent this year.
Further to that, Morningstar saw only 39 per cent of respondents describing their level of satisfaction from the provided consulting services as above average.
As far as this category was concerned, the financial planners voted in favour of Lonsec which once again received the highest score, with close to 44 per cent of the respondents rating its model portfolio as ‘good’ and a further 15.6 per cent stating it was ‘excellent’.
Zenith came second again, with a similar number of planners compared to last year describing its services in this category as above average (53.8 per cent).
At the same time, Morningstar continued the downward trend, with a lower number of planners voting in its favour. This year less than 30 per cent of respondents believed the firm’s model portfolio should be rated above average. By comparison, last year this figure stood at 44 per cent.
Financial planners this year decided that Lonsec had demonstrated the highest value and the company scored the highest overall rating, with close to 60 per cent of participating planners granting the firm a combined ‘excellent’ and ‘good’ rating across this category.
That also meant that Lonsec pushed last year’s winner, Mercer, off the podium. Zenith came second although the number of planners who gave it an overall ‘good’ rating dwindled from 61.5 per cent last year to 37 per cent. Further to that, Zenith also earned an ‘excellent’ rating from 15 per cent of planners who participated in the 2018 survey.
Similarly, Morningstar, which came third in the category, also experienced a decrease in the number of users from whom the company received an overall rating which was higher than average, as 40.7 per cent of them described it as either ‘excellent’ or ‘good’, compared to 61, 66.7 and 36 per cent in 2017, 2016 and 2015, respectively.