Networth News

Welcome to the Networth News update for Wednesday the 24th of August.

Fee-for-service to impact investment strategies

As the financial planning industry prepares for a move to fee-for-service, some planners are looking to reduce their reliance on outsourcing investment services through fund managers, according to Investment Trends research. The Financial Review reports that financial planners are considering a move towards offering direct equity services and using separately managed accounts instead of managed funds. The research found that 40 per cent of planners believe direct shares allowed them to differentiate their client value proposition, while 18 per cent use separately managed accounts.

Clients prefer time-based fees

More than two-thirds of clients prefer their financial planners to move to charging time-based fees, according to MSI Global Alliance research. Money Management reports that while planners remain the most trusted source of investment advice for clients, they believe a time-based dollar fee would ensure better value for their money. The research, which took in 570 small business owners, found that less than a quarter of clients would be happy to be charged a percentage of funds under management, while two-thirds regarded the government's two year opt-in proposal as a positive step.

Planners need to examine core beliefs

Financial planners need a core set of beliefs that they can draw on to help assist clients through volatile economic times, according to Portfolio Construction Forum. Professional Planner reports that planners need to be able to focus on both a macro and micro view in taking stock of market turmoil within the process of constructing robust portfolios. Graham Rich, publisher of Portfolio Construction Forum, said that without a guiding set of principles, financial planners risk taking a knee-jerk reaction with clients to unexpected market moves.

Small industrials index industrious

The small-cap industrials sector has defied analysts’ expectations and delivered overall positive earnings performance since the start of the earnings season in August. The Financial Review reports that the S&P/ASX Small Industrials Index has outperformed its equivalent in the resources sector. Many analysts were predicting that the industrials sector would struggle to deliver positive earnings prior to the reporting season. Goldman Sachs has upgraded earnings per share growth forecasts for small industrials in the current financial year, while forecasts for large-cap resources stocks have been reduced.