Bennelong Funds Management has explored how financial advisers can select the right research house for them, which means looking beyond fund ratings alone.
Advisers have a wide range of investment research houses to choose from, demonstrating the importance of understanding the differences between each provider and ensuring their services parallel the adviser’s needs and client base.
Stuart Fechner, head of research house and asset consultant relationships at Bennelong Funds Management, said it is critical for advisers to recognise that research houses can differ significantly in their approaches to evaluating investments and fund managers.
“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,” he explained.
While some houses tend to rely more on quantitative data and models, others prioritise qualitative factors such as the investment teams’ experience and philosophy.
Additional factors to note are the size and expertise of the research team, its usage of artificial intelligence and technological tools, as well as the broader range of services it potentially offers outside of fund ratings. This can include asset allocation guidance and tools for building model portfolios and managed accounts.
Fechner continued: “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.
“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.”
He encouraged advice practices to understand their own needs alongside the preferences of their clients when assessing reporting styles.
When engaging with research houses to select the right one, Fechner posed the following questions for advisers to ask:
- What is your investment philosophy and research approach?
- What are your points of difference and competitive advantages?
- How frequently do you review and update your information and reports?
- What is the range of services, information, reports, and tools you provide?
- Do you offer flexible subscription options or a complete package?
- How does access/subscription work and is it limited to specific individuals?
- 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,” he said.
