APLs under review
Dealer groups are removing investment products en masse from their approved product lists (APLs) in reaction to the performance of certain asset classes during the global financial crisis, according to the managing director of Wealth Insights, Vanessa McMahon.
McMahon said financial planners were moving away from complex investment products, with some dealer groups avoiding certain asset classes altogether.
“In many cases hedge funds, hybrid funds and agribusiness funds have simply been removed from APLs,” McMahon said.
She suggested that dealer groups wanted to return some of the products that had made their way onto APLs to the research stage. She added that they would want to make sure the products left on the APLs were solid.
“But definitely, there are some planners who are [saying] that asset classes have been taken off the APL,” she said.
Shadforths Financial Group chief executive Tony Fenning told Money Management that his dealer group was removing domestic property-focused investment products from its APLs.
While Shadforths had previously offered a number of Australian listed property investments, Fenning said the group now had concerns that “some of the main players there [are] becoming much more stock-like and less property-like … and you’re not getting the diversification that you used to get”.
As a result, they removed Australian property investment products from their APLs, Fenning said.
They were also reviewing their fixed interest investment products after questioning the value of those products’ liquidity and credit offerings, Fenning said.
They previously had a tendency to just take up those investment products and run with the market cycle, Fenning said.
Wealthsure managing director Darren Pawski said they removed several agribusiness products from their APL following the disasters in that sector, but the product approval procedures remained in place.
The chief executive of Total Financial Solutions Australia, Phil Aris, said his company was scrutinising managed investment scheme products much more closely since the collapse of Great Southern and Timbercorp.
Stuart Abley, head of Consultum, said it was quite radical to put a lockdown on a whole sector of investment products, but he could understand why a dealer group would go down that path.
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