Planners guilty of short-termism
Financial planners have been guilty of the same short-termism about which they warn their clients to the detriment of gaining better investment outcomes, according to investment and asset allocation specialist Tim Farrelly.
Speaking during a Money Management roundtable yesterday, Farrelly said the result had been that many fund managers had found themselves unable to take “big positions” because advisers were quick to dismiss them for poor performance.
“¨Getting the financial planning group, the financial planners, to focus on the longer term rather than the shorter term is the biggest single step we could make,” he said.
“As an example it has been very difficult for fund managers to pursue strategies which would require them to take big positions because advisers aren’t very loyal,” Farrelly said. “You get three years of rotten performance and you’re out of business. Clients are far more loyal to their planners than planners are to their product providers.”
He said that he could not imagine that many clients had been happy with the returns they’d received over the last six or seven years “but typically, when you talk to planners and you ask them 'how many clients have you lost’, they say two or three”.
“There’ve been hardly any clients who have fired their advisers through this process and yet they’ve had lousy returns, but if fund managers were producing those lousy returns for advisers they’d all be gone,” Farrelly said.
“So there’s this funny piece where the planners show far less loyalty to their suppliers than their clients show to them - and I think that is one of the behaviours we need to start working on by getting to the stage where the planner community takes a longer-term view,” he said.
Recommended for you
Single adviser-led firms continue to expand their footprint in the Australian advice ecosystem, Adviser Ratings research shows, as market conditions prove favourable for boutique practices.
With HNW investors representing the largest market for alternative assets, Praemium and CoreData research underscores why this presents a compelling opportunity for advisers.
Having completed the successful integration of Diverger, Count has upgraded its forecast for expected synergy benefits achieved by the acquisition by a third.
Australia’s largest licensee has seen the biggest number of adviser losses over the past week, while the expected wave of new entrants has boosted overall adviser numbers.