Communicating the value of research falls on researchers
Despite new disclosure requirements being welcome by most of the industry, articulating the value-add of investment research to consumers is left up to the interpretation of researchers, according to Zenith Investment Partners director David Wright.
One of the main purposes of Regulatory Guide 79 'Research report providers: Improving the quality of investment research' is to help the end consumer readily understand and identify the amount of value that research has added to their investment decision, he said.
According to Wright, it's left up to the research house to decide how best to present that data in their reporting.
"As an example, one of the things we do is (report) the value we've added through the ratings in a particular asset class. You can do it that way or you can do it on a per fund basis," he said.
The question may then be how often a research house is required to report this information, and whether it must then be broken down into the benchmark performance of 'highly recommended', 'recommended' and 'approved' products, he said.
"It can get pretty complex pretty quickly, and the issue with that is it then makes it difficult for the potential user to understand," he said.
"I'm not sure ASIC (Australian Securities and Investments Commission) has the answers on how they want that presented - so it may be a matter of research houses doing the work, presenting it and asking whether it is acceptable."
Recommended for you
The month of April enjoyed four back-to-back weeks of growth in financial adviser numbers, with this past week seeing a net rise of five.
ASIC has permanently banned a former Perth adviser after he made “materially misleading” statements to induce investors.
The Financial Services and Credit Panel has made a written order to a relevant provider after it gave advice regarding non-concessional contributions.
With the election taking place on Saturday (3 May), Adviser Ratings examines how the two major parties could shape the advice industry in the future.
