Research space to grow, but not forever

The booming investment research industry is likely to contract in three to five years as the market for managed accounts steadies and weaker industry participants fall away, a panel has heard at the Professional Planner Digital Researcher Forum 2020 livestream.

Lonsec director Ian Knox was joined by Morningstar director of manager research, Tim Murphy and Jana Investment Management consultant Michael Karagianis to discuss the continued fragmentation of the advice industry and how the rise of managed accounts has fostered a growth period for independent research consultants.

The continued proliferation of these providers, the panel found, shouldn’t be taken for granted.

“Certainly the growth of managed accounts has increased the supply of investment management options,” Morningstar’s Murphy said. “It’s hard to envisage that in three or five years time there will be as many.”

There’s likely to be “a handful” of independent researcher success stories, Murphy continued, and another cohort that find the going more challenging.

The advice market is currently spoilt for choice when it comes to research, Lonsec’s Knox reckons. He took a slightly more bullish view on the industry’s prospects, but agreed that there will be an eventual rationalisation in the investment research space.

“I do think it’s a growth industry generally,” he added. “I think that growth is going to introduce a lot more people into the marketplace over a number of years. But I’m on Tim’s side with the five year call, three years might be a bit early.”