Whileit was the yearMoney Managementwas born, most people’s strongest memories centre around market upheavals — the 1987 sharemarket crash in particular.
It was the best and worst time to be editor of a new-born financial services paper. There was a lot to write about, no shortage of colorful characters to quote (or misquote in true Out of Context style) and track but the commercial reality was that a lot of companies slashed marketing budgets in the wake of the 1987 crash.Money Management’sowner, John Fairfax, itself went into receivership, thanks to Laurie Connell and one of the signature deals of the excesses of the 80s.
Early on we decided, somewhat ambitiously, to create the fund manager of the year awards. Assirt’s Bill Healy and I worked closely on it and naturally it got a lot of attention — particularly from BT distribution supremo Terry Power who didn’t take kindly to coming second.
Every market cycle has its own quirks and traits but there are a number of similarities between 1987 and 2002 and, I suspect, others — like a property collapse — still to come.
But, one thing that has definitely changed in the past 15 years is where the pricing power resides. In 1987 it was with the fund managers. They developed the products, told the advisers how to sell them and what they would be paid. The launch of the first master trust — Asgard — in 1988 was the beginning of the end of that and now we are seeing the master trusts themselves under margin pressure from the new generation wraps.
Technology definitely marches to a faster beat in 2002 than in 1987 —MoneyManagementwas itself a technology breakthrough as the first Fairfax publication produced using desktop publishing. Producing a tabloid newspaper on two Macintosh SE computers with screens not much bigger than a Gameboy console sounds insane today, but that was bleeding edge technology in those days.
Reflecting on the early years ofMoney Managementinevitably leads to the unlisted property trust crisis and it remains the low point. It threatened the very fabric of the advisory and funds management industry.
What remains to be seen is whether events beyond 2002 will follow the 1987 trend.
Good financial planners tend to make bad large corporate citizens and often will need to throw off the shackles and spin out into new boutique planning firms. Certainly technology is on their side today.
On the funds management side, new boutiques are set to sprout because a number of good managers need to keep themselves gainfully employed, but also under the emerging distribution model it is all about the platform and giving investors and advisers a choice of product styles.
The financial services industry has been turned on its head in the past 15 years. This may be the one time when past performance is an accurate guide of what to expect in the future.
Robin Bowerman waseditor from 1987-1990and is now managing editor of Personal Investorand Asset magazines.
