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Planners still wary over market By Mike Taylor
Wealth Insights Financial Planner Sentiment Index
Wealth Insights’ Financial Planner Sentiment Index – June 2012 60
6,000
53 38
40
15
20 0 0
0
0
0
0
-9
0
-3
0
0
0
0
0
0
0
0
7 0
16 0
5,000
0
0
-2 -1
-20
-15
-36
4,500 4,000
-40
3,500
-60
3,000
Source: Wealth Insights
particularly in the short-term. However, the uncertainty being felt by planners and the cautious investment settings being recommended to clients were not serving to undermine the health of financial planning practices. McMahon said that while
sentiment remained at low levels, this did not necessarily reflect the underlying health of financial planning practices, with most planning businesses still performing well, particularly those with well-established client lists. “People may be cautious
Research houses: consolidation concerns By Andrew Tsanadis
THE consolidation within the financial planning dealer group space is a potential concern for research houses over the long-term, but at the moment it’s business as usual. According to the soon-to-be published Money Management Top 100 Dealer Groups survey, a number of dealer groups have switched research providers since 2010 after being acquired by one of the larger institutions. This includes the National Australia Bank-owned Apogee Financial Planning and Godfrey Pembroke, which changed from Three Sixty Research to Lonsec – NAB’s main external research provider for managed investments. In a similar fashion, as Commonwealth Financial Planning switched from Standard and Poor’s (S&P) to Morningstar, so too did the CBA-owned dealer group Financial Wisdom. Count Financial – which was acquired by CBA last year – had earlier changed its research provider from van Eyk to Lonsec. In targeting the remainder of the independent financial adviser market, van Eyk Research chief executive Mark Thomas said it was important to focus on dealer groups that have “multiple touch points” with the services van Eyk provides.
5,500
32
29
24
ASX All Ordinaries Index
FINANCIAL planner sentiment has shown little recovery so far in 2012, with planners remaining deeply cautious amid continuing bad news out of the Eurozone and continuing uncertainty about the Australian regulatory environment, according to the latest data released by Wealth Insights. The Wealth Insights Financial Planner Sentiment Index for June has recovered by barely a point since May, and is sitting at levels reminiscent of some of the darker days of the global financial crisis (GFC) – albeit much higher than the depths reached in February 2009. What is very clear from the Wealth Insights data is that sentiment has remained generally cautious since the first quarter of 2011.
Commenting on the data, Wealth Insights managing director Vanessa McMahon said both planners and their clients remained very nervous and worried about global events, particularly the Eurozone crisis and instability in Greece. “What this has translated into is a reluctance to advise clients to get back into the market,” she said. “A lot of money is still being directed towards term deposits. “Planners are saying there is simply no clear-cut evidence that it is time to be advising their clients to get back in the market,” McMahon said. Sh e s a i d h e r c o m p a n y ’s focus group exercises suggeste d p l a n n e r s w o u l d re m a i n cautious for some time to come, with few of them believing there was likely to be any significant improvement in the Eurozone,
Sentiment Index
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Mark Thomas “We’re not short of people to talk to, we just need to focus our energies in areas where we think there’s reciprocal value,” he said. “We sell them research, we do consulting with them and they may use a couple of investment funds in Blueprint, where there are gaps in their approved product lists,” Thomas said. For Zenith Investment Partners director David Wright, consolidation at the industry level is overplayed, and has only affected his business marginally. He added that Zenith will not change its sales and marketing strategy for the time being.
One of Zenith’s clients, Futuro Financial Services, recently sold a 10 per cent stake to AMP, but Wright said it has not affected their current research contract with them. Moving to the internal research capabilities of AMP may come into play over the long-term when Futuro move towards potential full acquisition, he added. According to Wright, this period of consolidation is part of a cyclical process whereby the current hold by the major institutions will once again ease, and the “better financial advisers” will once again break away and form their own independent businesses. “If you look at the industry more generally in terms of who are the potential clients for research houses, the number of clients is shrinking but the size of those clients is getting larger,” Morningstar co-head of funds research Tim Murphy said. Research houses that are able to win those large contracts will be in good stead going forward, he said. Wright added that the departure of S&P from the market has been helpful to the remaining players who have picked up some of their clients, Zenith included. “At the margin, subscribing clients are being acquired, but the flipside of that is larger institutions are subscribing for external research in order to satisfy the requirements of the businesses they acquire,” he said.
and investors may be subdued, but that is not translating into planners going out of business,” she said. “There does not appear to have been any significant reductions in numbers of clients or the level of funds under advice,” McMahon said.
AMP’s aggressive push for SMSF scale By Milana Pokrajac THE formation of the self-managed super fund (SMSF) business unit AMP SMSF and the pending acquisition of Cavendish Group are part of AMP’s broader strategy to further build on scale, according to the group’s director of integration and head of AMP SMSF, Paul Sainsbury. Widely regarded as the fifth pillar of Australia’s banking system, AMP retains the largest financial planning network in the country, with over 2,600 advisers working under its umbrella and around $80.2 billion in funds administered by its adviser network ( a c c o rd i n g t o f i g u re s i n t h e u p c o m i n g Money Management Top 100 Dealer Groups survey). Sainsbury said tapping further into the SMSF market was a natural next step for the insto, with the sector growing faster than any other in superannuation. “The research is showing that 40 per cent of new SMSFs have some sort of financial advice attached to them, and that compares to only 14 per cent of existing SMSFs that have had some sort of financial advice,” Sainsbury said. “So there is demand out there from our customers and it’s appropriate for AMP to respond to that.” Continued on page 3