Planners will 'wait and see' on Lonsec
Financial planning dealer groups and others using leading research house Lonsec have signalled they will be taking a ‘wait and see’ approach to the company, following its acquisition by the owners of SuperRatings Limited.
The reason for the caution by some of Lonsec’s clients is not any loss of faith in its research and ratings methodology, but the perception that SuperRatings has a long history and close association with the Industry Super Network (ISN).
In particular, reference has been made to SuperRatings having provided the data that gave rise to the ISN’s so-called ‘compare the pair’ television advertising campaign, with the company’s name still appearing in the disclaimers attached to many of the advertisements.
A senior executive within one of the major independent dealer groups utilising Lonsec’s services told Money Management that if, as indicated, Lonsec is allowed to remain operationally independent he could see no reason for concern.
“However we will be adopting a ‘wait and see’ approach,” he said.
Other senior financial planning executives noted the manner in which changes of ownership and personnel at other ratings houses had led to a loss of dealer group mandates in the past two years.
Big Swiss-based insurer Zurich announced late last week that it had sold its subsidiary Lonsec business to a newly formed company – Financial Research Holdings (FRH).
It transpired that FRH was a vehicle formed by Mark Carnegie, the chief executive of Lazard’s Australian private equity business, LCW Private Equity.
Within an hour of the Lonsec announcement, SuperRatings announced “its intention to consolidate its business into Financial Research Holdings”.
Carnegie’s formal statement announced that the two transactions represented “a unique opportunity to bring together two of the leading research brands from the investment and superannuation sectors”.
Money Management has been told that in the due diligence and negotiating stages, each of the front-running bidders for the Lonsec business indicated they would not be seeking to change either Lonsec’s methodology or its highly successful business model.
FRH managing director, Jason Clarke, claimed there would be little change for clients and staff of Lonsec.
He said that while the new company hoped to enhance services for clients over time, it expected little interruption to the business during the transition period.
Long-time researcher and founder of brillient, Graham Rich (pictured), said his view of the Lonsec acquisition was overwhelmingly positive because it demonstrated faith in the value of genuinely independent research in Australia, and injected further Australian ownership into the market.
He said suggestions that the Lonsec model might be placed at risk were misguided because of its strongly qualitative credentials and because of the depth and integrity of its research team.
“It is a good outcome for genuinely independent research,” he said.
AUTHOR
Mike Taylor
Recommended for you
With wealth management M&A appetite only growing stronger, Business Health has outlined the major considerations for buyers and sellers to prevent unintended misalignment between the parties.
Industry body SIAA has said the falling number of financial advisers in Australia is a key issue impacting the attractiveness and investor participation of both public and private markets.
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
