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Australia’s biggest fund managers have recorded inflow declines in the March quarter, reflecting and in some cases exceeding those experienced at the height of investor despair in late 2008 and early 2009.
Data from Plan For Life to March 2010 showed groups such as AXA Australia, AON Consulting and Equity Trustees recorded their lowest inflows into managed funds (excluding cash management trusts) for the past two years, exceeding falls in the December 2008 and March 2009 quarters.
Other groups recorded their second worst quarter, with lows being hit in December 2008 or March 2009. They included AMP, ING, Mercer, National Australia Bank/MLC, BlackRock, Commonwealth Bank/ Colonial, IOOF and Macquarie Group.
The trend of falling managed fund inflows reflected falls in share markets. The publisher of The Pain Report, Jonathan Pain, said recent falls in investor sentiment were the result of an acknowledgement of the ‘day of reckoning’ for debt-laden Western economies.
Colonial First State head of distribution Marianne Perkovic acknowledged that “the world that we live in now is a lot more unstable”.
“We just have to accept that we live in a period of volatility and, once the market falls, consumers seem to lose confidence,” she said.
“Once investors understand the sovereign debt crisis overseas, it may contribute to gaining confidence over here. We also have to see what the Government does with the super profits tax, which may restore confidence in the resource sector,” Perkovic said.
Business uncertainty for Australian advisers might also be impacting inflows.
“Advisers are still waiting for the Government’s regulatory review and once they gain clarity on that issue, they will focus more on clients and not on restructuring their businesses,” Perkovic said.
She said Colonial had noted “some kick-up in the 30 June quarter, and I think most businesses have”.
Not all inflows have been on a downhill slide. BT Financial Group and smaller player netwealth were two that bucked the trend.
BT Financial Group head of platforms John Shuttleworth attributed his group’s growth in market share in part to its “quality” dealer group clients, which include Count Financial, Shadforths, DKN and WHK Group.
Shuttleworth said many advisers associated with those groups were already operating on a fee-for-service model and had not been distracted by impending regulatory reforms, instead remaining focused on their clients and offering long-term advice.
Shuttleworth said BT had also been rewarded for investment in its platform, leading to platform enhancements and a strong back-office offering.
Netwealth executive Matt Heine attributed his group’s growth to product developments and efforts to diversify its distribution channels.
He said product innovation, including the introduction of managed account technology, had “opened up a new and previously unknown client base”. He added the group had assisted advisers to consolidate legacy and secondary platform business to drive back-office efficiency and reduce overhead expenses.
He said the uptick in inflows could also be attributed to the group’s policy of continuing to recruit “at a time when most organisations were reducing headcount”.
Netwealth’s key distribution channels include Bridgeport Financial Services and FPSA as well as non-aligned firms.
