Planners demand proof of value for money

The manufacturers of higher fee investment products are going to increasingly need to prove their value to both advisers and their clients, according to new research analysis from Investment Trends.

In an environment in which advisers and clients have become cost-conscious, the latest Investment Trends Adviser Product and Marketing Needs Report has pointed to an environment in which value for money has been placed front centre.

This is consistent with findings of most recent Money Management Fee Comparator exercise which found that while investors were prepared to pay for outperformance and to meet particular objectives, fund managers had to deliver on the promises they made.

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Recep Peker, Investment Trends Research Director said his company’s research had confirmed that to be considered, investment products typically not seen as low cost had to demonstrate value to planners and their clients in other ways.

“For example, the adoption of managed accounts has seen strong growth as more planners choose them for the efficiency benefits offered over investing in direct shares and traditional managed funds,” he said.

As well, Peker noted that planners were taking a more goal-oriented approach in their advice delivery and cited AMP Capital’s adoption of a goals-based investing approach.

He said the 2018 Investment Trends Financial Advice Report had revealed a growing appetite for financial advice, with the number of potential planner clients doubling from 2013 with virtually all potential clients expecting planners to help with their financial goals and with over half also expecting involvement and assistance with their personal and lifestyle goals.

“It is vital for planners to create a clear link between their clients’ goals and the advice they provide,” Peker said. “Our analysis reveals that the planners with the most satisfied clients are often those who are successful in creating congruity between the client’s investments and their goals.”

“Moving forward, planners intend to become more goal-oriented in their advice, with many agreeing it will create deeper client engagement. However, goals-based investing is still in its early days, with 87 per cent of planners citing challenges in the provision of this advice,” he said.

“To establish a strong standing in the goals-based investing space, it is critical for product providers to support planners in these early days,” Peker said.

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