Financial planners are ditching direct equities for managed funds, according to Zenith head of sales and marketing John Nicoll.
Nicoll said he had seen a clear shift away from direct equities and back to managed funds over the past year due to planners' inability to keep track of performance – and resulting poor returns.
"If you ask an adviser whether they can show you their true performance compared to benchmarks, it's very, very rare that they can actually track the true performance that they're delivering," he said.
Benchmark performance reflected the average and was not indicative of the best asset managers, according to Nicoll. As a result it acted as a poor comparative measure.
Many planners' performance could not be compared to the best equities managers who had a horde of staff who were focused on that core task, he said.
There was no evidence that tactical asset allocation had been more successful than traditional strategic asset allocation, according to Nicoll. He said the amount of time tactical allocation took could be counter-productive, even in the case of good performance.
"We've rarely seen evidence of somebody who's a true tactical allocator who comes out with a greater result than somebody who is a traditional strategic asset allocator (who) maintains a long-term view and traditional long-term allocations," he said.
He said a planner's client base would determine their use of direct equities and strategy. Some were very good at it, but for the majority of smaller planner groups with mum and dad clients, model portfolios could add more value for the client, Nicoll said.
