Networth News

Welcome to the Networth News update for Tuesday the 27th of September.

Investors encouraged to stay the course

Fund managers believe that investors can still make money in the current volatile financial market if they have strong nerves and take a long-term approach. The Financial Review reports that Sebastian Evans, portfolio manager for Naos Asset Management, said there are some outstanding investment opportunities, especially in the small cap space. In the current market climate, balance sheet strength, the income a stock produces and stock valuation are three key criteria for investors looking at equities, according to Matt Sherwood, head of investment markets research for Perpetual.

Retirees concerned about longevity risk solutions

Institutional superannuation funds need to offer cost-effective longevity risk solutions to encourage member retention. Money Management reports that longevity protection is one of the most complex issues faced by retirees, according to PIMCO Australia. Longevity risk is a major unsolved issue for retirees, as growth-based investment solutions often conflicted with a heightened aversion to market risks for the older demographic, said Tony Hildyard, PIMCO Australia's head of retirement solutions. As such, a cost-effective hybrid longevity risk product, which combines a guarantee and a separate investment product, would prove more attractive to retirees.

Institutional investors look for brand reputation

Brand reputation is an important investment consideration for institutional investors looking to choose a new manager, according to Cogent Research. Financial Standard reports that a significant number of institutions in the US are looking to add at least one asset manager over the coming year. However, just over a quarter of the top asset managers have high levels of awareness and favourability among institutional investors. The research also found that performance, philosophy and organisational stability are key selling points for managers, while thought leadership can be important in building reputation among investors.

Financial planners need reasonable steps defence

Financial planners could potentially by exposed to litigation from clients under the Future of Financial Advice (FoFA) "best interests" test, according to the Association of Superannuation Funds of Australia (ASFA). Money Management reports that one of the more difficult issues in relation to scaling or de-scoping advice is defining the obligation of the adviser and the role of the client. ASFA said in a submission to Treasury that advisers are better placed to determine the scope of advice and that a "reasonable steps defence" to the best interest test could be appropriate when the adviser had a duty to determine the scope of the advice.