Institutional advisers are increasingly flocking to independently-owned dealer groups, according to RIAA.

Advisers flock to independent firms

Increasing market trend

Victoria Papandrea

By Victoria Papandrea
Wed 10 Dec 2008

Institutional advisers are increasingly flocking to independently-owned dealer groups, according to RIAA.

There is an increasing trend for institutional advisers to pack up and join independent dealer groups, according to Risk and Investment Advisors Australia (RIAA).

RIAA has experienced an influx of institutional advisers flocking to join the independently-owned boutique dealer group over the past 12 months, RIAA managing director Grant Scalmer told InvestorDaily.

"With now around 85 per cent of dealer groups owned by institutions, a lot of advisers are looking for that dealer group where they are not owned and dictated to by institutions," he said.

Advisers that are currently looking to join RIAA or who have joined the group over the past year have predominantly come from dealer groups owned by large institutions, Scalmer said.

"In a couple of instances their colleagues or friends have joined us from big institutions and they are seriously unhappy where they are," he said.

"One of the groups that I spoke to recently has been with their existing dealer group for a long period of time and is now starting to question what sort of value they are getting from these dealer groups," he said.

Scalmer believes this is a big trend as now is the time when advisers are starting to look at the value they are getting from their dealer groups.

"They feel that they are paying these fees and not getting any help or assistance in running and managing their business," he said.

Downturn to spur resurgence in direct investing

Mike Taylor

Australian investors are more likely to go it alone and invest directly in a rebounding share market following a decline of trust in the funds management industry, according to research by financial services agencies Endgame Communications and Investment Trends.

The report identifies a significant trend towards more hands-on investing in the wake of the volatility.

Investment Trends principal Mark Johnston said perhaps the most worrying figure for the industry is the fact that 42 per cent of managed fund investors at least somewhat agree that their trust in fund managers has been damaged and they would prefer to invest directly going forward.

“We believe another significant surge in SMSF [self-managed super fund] establishment is likely to occur over the coming years, which would be consistent with the last bear market.”

Three in 10 investors were conducting their own investment research, stating their own Internet research had the most significant influence on their investment decisions, with daily newspapers being the second most significant influence.

Johnston said just a third of these clients said their planner was currently having the most influence on their investment decisions; many added “their own online research and the media are persuasive factors”.

Meanwhile, family and friends continued to influence 74 per cent of investors during the financial crisis.

The research shows a strong link between investor satisfaction with communication received from their fund manager and the propensity to switch funds, with investors less likely to abandon their provider if they are satisfied with the information they are receiving about their investment.

One in four investors using managed funds intended to switch or were considering switching all or part of their managed funds investments while almost one in five investors were considering switching super providers.

However, despite the deep concerns about the current climate, the vast majority of respondents recognise the importance of taking a long-term view, with 75 per cent of investors holding on to their investments during the crisis.

Johnston said there are also encouraging signs that investors are considering heading back into the market.

“Many are now on the hunt for bargains, with 52 per cent of SMSF investors planning to buy undervalued assets.

“Balancing this, there has been a large increase in the number of investors choosing to wait on the sidelines, with 42 per cent of SMSFs refusing to invest new money until the volatility subsides.”