Changes in how licensees and advisers use investment research is opening the doors to smaller, specialised research newcomers offering an alternative to the established giants.
Research industry veteran Rob da Silva says a growing number of licensees are discarding the restrictions of formal and rigid approved product lists and instead adopting the view that if an investment product has a rating from an appropriate research firm, it’s fine for their advisers to use.
Clocking up 40 years in the financial services industry in 2024, da Silva has formally re-entered the research business as head of research with Research IP, having left SQM Research in June last year.
At SQM, da Silva was head of manager research. Before that, he held the same title, along with the deputy chief investment officer position, at van Eyk Research. His brief at Research IP is to create a “full-service research business”.
Research IP is based in Australia but has developed a significant presence in New Zealand and da Silva’s appointment signals a renewed focus by the firm on Australian financial advisers. He describes the Australian business as “a semi-start-up from a research perspective” but notes the research capability he’s been hired to create will be built on a significant existing research infrastructure.
The core of the Research IP philosophy is to produce “a well thought-out, expert opinion on a product”, da Silva says.
“We want to separate out and make a clear, what is a description, and what is an opinion,” he says.
“In a lot of reports, that can be a little muddled. Advisers and most people want to know, what do you think? Is this good, bad or indifferent, or what? How does it sit in comparison with industry best practice?”
Research IP is the second firm to begin building an Australian research capability in the past six months or so. In August last year former Morningstar director of manager research APAC Tim Murphy joined Insight Investment Consultants to build a new research capability to offer advisers and licensees an alternative to the majors.
Murphy told the Professional Planner Researcher Forum in December last year that a closer focus on a smaller number of managers and products was a way smaller research firms could meet the needs of licensees and advisers better.
But da Silva, who was also at the event, says the trend away from fixed APLs “has been around for quite a while, but it does seem to be accelerating to a certain degree or, at least, running pretty strongly”.
“It is a more – let’s call it open-architecture – type of approach,” he says.
“This sort of trend opens it up to a variety of players, and then the question becomes: who’s doing a good job? Let’s choose people that we trust and have faith in their opinion.”
He says advisers “get presented with product all the time”, and they need a reliable and credible third party to endorse or dismiss what’s in front of them.
“If they’re alone in making that call, that’s a difficult place to be when you’ve got the regulatory responsibilities that are put on you by legislation,” he says.
Research IP’s manager and product review process won’t be based on pre-determined and inflexible sector-review cycles, da Silva says.
“So you wouldn’t tell managers that the equity cycle isn’t happening for another six months, go away,” he says. “We’ll do the work anytime throughout the year.”
For the time being, Research IP’s resources are da Silva supported by the firm’s managing director and partner Darren Howlin and managing partner Oliver Trusler; Research IP’s existing offshore admin and processing capability; and a range of industry-based contractors that da Silva can call on as needed.
“It means that you can be responsive to client demand,” da Silva says.
“If advisers or managers, et cetera, [say] we really need something quick, for whatever reason – we’ve got a product launch happening or whatever – we can say we can do that, [and] our current pipeline doesn’t have to be disrupted.”
