Qualitative reports 'class advice'

Research provider FundSource will be able to deliver its reports direct to retail investors, now that they are classified as financial advice.

Monday, July 10th 2017, 6:00AM 6 Comments

by Susan Edmunds

It now has 36 qualitative fund reports available for nine fund managers.

In an update, head of FundSource Glen van Echten said the business could now classify its qualitative reports as class advice, which meant they could be given direct to retail investors. The information is available on the FundSource website.

Fund manager John Berry, of Pathfinder, said that was good news for product providers and investors.

“As class advice it is not personal to any single investor but applies to the category of investors who may be interested in a particular fund,” he said.

“Now that FundSource are comfortable the research papers are class advice we can make them available to all investors. Previously they were only available to wholesale investors.  More information in the hands of investors to help with decision making is a good thing - particularly when it is a research driven analysis of an investment product.”

FundSource has also entered into a partnership with Strategi to provide trainee advisers with free access to the FundSource Investor hub, along with access to all FundSource qualitative research reports while they are studying with Strategi.

The business has been through a period of change over recent years.

In 2015, it dropped its qualitative research functions when it partnered with Financial Express on a quantitative tool. Then it entered a strategic partnership in which Darren Howlin, managing director of research at unlisted managed funds service Research IP and former research manager at Lonsec, to conduct the qualitative research on FundSource’s behalf.

It issued its first qualitative report under that arrangement last May.

Tags: funds management FundSource investment Strategi

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Comments from our readers

On 10 July 2017 at 6:44 am Murray Weatherston said:
Call this a dumb question but "who made the ruling that the fund reports are class advice?"
Presumably the same applies to a broker's individual stock report?
On 10 July 2017 at 7:09 am Pragmatic said:
Good question Murray. I'm not sure I understand the comment - or that NZX understands the implications
On 10 July 2017 at 8:50 am NormanStacey said:
Good for FundSource. Facilitating information in the marketplace is surely a good thing.
The only reservation is that these succinct, independent, lucid fund reports could be used in lieu of Fund Manager's lengthy, formulaic, boring & in a large part irrelevant, Offer Docs.
On 10 July 2017 at 12:47 pm Barry Read said:
From the FMA Website;

Class service

This is anything that is not a personalised service, e.g. brochures, seminars and internet material targeted towards a wide class of people rather than an individual. For more information see s15 of the Act.

AFAs, QFE Advisers and registered individuals or entities can all provide class service to retail clients, irrespective of which category of product the advice is about.

Note that advice provided about a class of products is not financial advice and is outside the regulatory scope of the Act. (See section 10.) This is a different concept than class service which is covered by the Act.
On 11 July 2017 at 7:45 am Murray Weatherston said:
Call me even dumber having another crack at this, but what has changed recently to ignite this story?
Story subtext is that fund reports were previously restricted to wholesale advisees. But now "someone" has ruled that they are class advice, so they can be freely disseminated to retail clients.
Two questions
1. Who is the "someone"?
2. Is this just a marketing ploy story?

I'm not questioning Fundsource publishing their fund reports. It's the context of the "news" I just don't follow. From Barry's quotes from FMA website, why weren't fund reports always class advice? Fundsource (now merged into NZX) was registered on FSPR.
On 11 July 2017 at 7:48 am Murray Weatherston said:

Methinks you are "tongue-in'cheek'.

Surely you appreciate that "Manager's lengthy, formulaic, boring & in a large part irrelevant, Offer Docs" are as a result of their lawyers interpretations of the regulator's requirements.

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