[The Wrap] Advice is more than just fees; Celebrating the best

Too much focus goes on fees and remuneration when it comes to financial advice, so it was good to see a report this week paints a picture of the value of financial advice.

Saturday, November 30th 2019, 5:53PM

One of the highlights this week was reading the Russell Investments value of advice paper. (Links below). What I liked about is that it articulated well what advisers do.

Far too much attention is put on fees and remuneration and little on the good that financial advisers do for their clients.

It's pretty important the regulators and other bureaucrats read the report and broaden their thinking around the value of advice.

It's much broader and more valuable than the fees area they tend to have a fixation with.

Russell split advice into three sections; annual rebalancing, avoiding behavioural mistakes and the cost of getting it wrong.

It demonstrates that the work financial advisers do is very broad and covers more than just writing a plan, implementing, monitoring and reporting.

It's therefore impossible to try and create prescriptive rules around what is good advice. Thankfully New Zealand, has generally avoided the prescriptive route over a principles-based approach.

Russell Investments summed it up well: "We believe adviser value far surpasses the typical amount charged in fees. We think an adviser’s clients should also feel this way."

A final foot note is that while the report is quantifying the work investment advisers do, it also has some relevance like life insurance and mortgages.

LINKS
Using an adviser adds more than 5% to a portfolio

Download report

CELEBRATING SUCCESS

Last night was a big one for all of here at Good Returns with our Fund Manager of Year awards, held in conjunction with managed fund research house Research IP. First up congratulations to the winners and finalists.

It was good to see 19 managers represented in the awards which shows there is a good depth of quality across the funds management industry in New Zealand.

Of course it was fascinating to see how active managers compared to their passive peers. While markets are still pretty bullish, it was interesting to see Smartshares take out a number of awards. If there was a take out here it is that there is a place for both management styles.

One of the areas we want to differentiate the Good Returns awards from others is to engage advisers in the process, hence the addition of the Advisers' Choice Awards. Getting the tick from advisers is a massive endorsement for any manager, considering how important advice is in the distribution of funds.

The winners here were Mint Asset Management, Milford Asset Management and Fisher Funds.

Tags: Opinion