Portfolios 'more homogenised'

Investment portfolios have become more homogenised since the advent of financial services regulation, one third-party fund marketer says.

Friday, April 4th 2014, 6:00AM

by Susan Edmunds

Matthew Mimms said he had noticed advisers were still grappling with the ongoing demands of regulating and the costs associated.

“As a consequence there seems to be more of a homogenisation of portfolios as there’s a migration from small one-, two- or three-man businesses to dealer groups. That’s accelerating as regulation nbites.”

He said it was not bad for investors if it meant that they were getting access to well-researched and diversified portfolios. “That’s a positive thing.”

But he said the cost of getting advice for “mid-wealthy” people had increased. “If you’ve got $100,000 in investable assets it’s less likely you can afford advice on that. It’s making quality advice unaffordable.”

He said the likelihood of advisers tailoring individual portfolios for their clients was probably diminishing. “From my point of view, the industry is a low more gate-kept than five years ago. If you’re a financial adviser, you’ve got to think about what your role is, you’re probably more a GP to investors, doing plans, dealing with client issues and determining their goals. You’re more likely to outsource the portfolio construction and asset allocation to others.”

New Zealand’s market was small but offered investors a reasonable choice of assets, he said. “There’s been no major changes in terms of assets or the strategies investors are being advised on [as a result of regulation],” he said.

But he said there remained an availability issue. “Investors don’t have the choices they have in Europe, North America or even Australia.”

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