Everyone in the industry would need to be able to clearly articulate their value proposition, he told the Meet The Managers conference on Friday. Benchmarks were becoming irrelevant, he said, because consumers did not care if an adviser beat an index, if they returned less than they could have got at a bank. Telling a client the fact you’d lost 1% was good news because the index dropped 4% would not be acceptable, he said.
More than a quarter of United States financial advisers now report in absolute terms with no reference to benchmarks, Coplestone said. “I don’t think anyone would want to pay a premium for mediocrity going forward.”
Andrew Hall, of K2 Asset Management, said changing demographics did not just mean more grey-haired clients.
Advisers should look at the opportunities presented by global trends beyond their ageing client base. Global trends offered investment opportunities, particularly in equity markets, he said.
Themes such as the growing reach of the internet meant production houses and firms such as Disney were a good investment because their potential audience was growing hugely, he said. Other trends, such as problems with obesity, made firms such as dialysis equipment producers a good option. Even moves towards an increasing focus on health and fitness boded well for sportswear producers.
Pengana’s Ric Ronge said the outlook for resources had also noticeably improved, after a period in the sin bin. “The outlook is the best it’s been in 18 months.”
He said equities were the best way for advisers’ clients to get exposure, rather than trying to invest directly or via ETFs, which were inefficient and illiquid.
Both said clients were increasingly keen on traditional investment processes where they could understand the value they were getting.
Hall said: “The simple, vanilla approach of something like buying direct equities resonated with investors and planners. The time of overly complex products has passed.”
But Coplestone said advisers who continued to seek out lump-sum clients and ignore the younger people saving for their retirements through KiwiSaver were doing themselves a disservice. He said the savings scheme was the elephant in the room and offered huge opportunities for advisers.
“KiwiSaver will underwrite the industry.”
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ETF’s based on benchmarks are more popular than they have ever been. … “more than a quarter of financial advisors now report in absolute terms with no reference to benchmarks”. I wonder why that is. I suspect it is because after fees they don’t beat the benchmarks, so very convenient. LOL.
Pengana says “the outlook for resources is the best it has been in 18 months”. Duh the price of BHP is up 20% from its lows so it doesn’t look like this is exactly new information, much less useful information. Pengana said “equities were the best way for advisor clients to get exposure rather than trying to invest directly or via ETFs which were inefficient and illiquid”. Ridiculous comments. But I guess if your business is selling active management you can’t let the facts get in the way of a good sales pitch.