The satisfaction of financial advisers with the research teams employed by their licensee has improved in the past couple of years, but a new analysis has found that it remains the lowest for any key group of licensee staff.
CoreData’s Future of Advice research has found that 56 per cent of advisers overall say they’re satisfied with their licensee’s research team. This contrasts with 93 per cent of advisers who say they’re satisfied with the external asset consultants they use.
CoreData managing director APAC Dean Thomas says there’s an element of human behaviour in the results: an adviser who’s gone to the effort and expense of hiring an asset consultant to work with is unlikely to admit to being dissatisfied with the decision.
“They’ve taken the additional steps to go out hire an external asset consultant, and typically those external asset consultants are creating bespoke portfolios for that adviser or for that practice,” Thomas tells Professional Planner.
“The level of satisfaction in terms of activity is much higher because they almost see these people as part of their own practice, designing and building and crafting bespoke solutions for them, and then monitoring and managing that for them.”
The findings come as Professional Planner relaunches the Researcher Forum, an event catering to key players involved in the assessment and delivery of investment solutions to advisers and their clients. In 2024 the event will run over two days on 2 and 3 December, in the Blue Mountains west of Sydney.
The CoreData research shows there are also some fundamental underlying business reasons for why licensee research teams suffer lower satisfaction scores – and it has nothing to do with the quality of the work they do.
Thomas says some asset consultants have a portfolio-manager-to-advice-practice ratio cap, which means each portfolio manager serves only 13 advice practices, whereas the internal research team of a licensee might be supporting hundreds of advisers.
“When you look at the research team for someone like an AMP or a Rhombus, et cetera, they’ve got 580 advisers,” Thomas says.
“That research team doesn’t have 580-divided-by-13 [44] people. You’re paying [the consultant] for access; you’re paying for additional access. The research team is doing a good job, but it’s just a volume [issue] when you’re having to serve so many advisers, and obviously accessing them at a critical point in time becomes difficult.”
The CoreData research shows that a growing number of licensees have adopted an open Approved Product List, which Thomas says is appreciated by advisers and has led to increased satisfaction scores from advisers. He says an open APL makes it simpler for advisers to work with asset consultants.
“It gives the gatekeepers more colours in the palette to construct portfolios,” Thomas says.
“The open APL has actually allowed more bespoke construction of portfolios because there is now more choice.”
But there’s an element of “you get what you give” to the adviser and researcher relationship: advisers and practices that engage more deeply with the research teams in their licensees express greater satisfaction with the team. These are also practices that tend to be on faster growth trajectories, Thomas says.
“It is significantly greater with those advisers that have got strong growth plans,” Thomas says.
“The reason for that is they’re probably more actively engaged with those research departments, obviously around portfolio construction. They’re constantly reaching out to them and testing that market.”
Conversely, practices that do not engage with the team, typically those that are stagnating or in wind-down, express lowest satisfaction.
“It’s low with those firms that are looking to trim or exit, because guess what? They’re not really engaging with them. It’s pretty hard to test your satisfaction if you’re not really actively involved or actively working with those [teams].”
The CoreData research also reveals a growing trend – again, strongest among practices in growth mode – to engage external asset consultants to construct managed accounts for their practice.
For these practices the cost of the relationship with the consultant is justified by the improved efficiency a managed account service brings, which allows them to serve more clients.
