Boutique manager resurgence unlikely in present market
The number of boutique fund managers are unlikely to rise due to tightly monitored approved product lists (APL) and a reluctance by advisers and their clients to move too far from the mainstream according to Instreet managing director George Lucas.
Lucas said that boutique manager numbers had halved in the last five years and there was unlikely to be a resurgence in the local market as a result of conservative attitudes from local investors and sensitivity to high active management fees.
"Australians are more conservative than their counterparts in the United Kingdom and the United States and a fee consciousness has developed which does not favour high active manager fees," Lucas said.
"At the same time there are less decision makers inside dealer groups who are making the choice for boutique managers while they work with APLs that have become tightly controlled."
Lucas said tightly controlled APLs are evidence of a stifled funds management and financial advice system and questioned whether stability was the main factor being sought in the financial products and advice sector.
"At the moment the sector is moving to over-regulation and it is being seen even at the banking level with restrictions on lending for investment property and with prudential controls on lending into self-managed super funds," Lucas said.
However some planning groups, typically in the non-aligned sector, were working around these restrictions and offering a broader range to their clients with Lucas stating “the smarter one are already offering features beyond the big end of town”.
“For some planners this issue has been hard to define. They may consider they run their own business but may still be under a limited or tight APL and the issue is between choosing an open APL with higher risk or a limited APL with greater product restriction.”
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