With so many options available for financial advisers choosing a research house with which to partner, Stuart Fechner, head of research house and asset consultant relationships at Bennelong Funds Management, emphasises the importance of understanding the differences between providers and ensuring their services align with an adviser's needs and client base.
"It is essential for advisers to recognise that research houses vary in their approaches to assessing investments and fund managers. Advisers need to investigate deeper than just the fund ratings and consider the underlying methodologies used by research houses, the range of services offered, and the overall fit with their business," Mr Fechner said.
Research houses can differ significantly in their approach to analysing funds. Some may lean heavily on quantitative data and models, while others place more emphasis on qualitative factors like the experience and philosophy of the investment team.
The size and expertise of the research team, as well as the integration of AI and technology, can also influence the scope and depth of research coverage. Furthermore, Mr Fechner notes that some research houses offer a broader range of services beyond fund ratings, such as asset allocation guidance and tools for building model portfolios and/or managed accounts.
“While noting the key and core item of a research house is in providing fund ratings and reports, differences exist in terms of related services, information and systems that may be available. Some potential clients may only seek or only need a pure fund rating and reports service, while others may find items such as asset allocation insights or advice regarding building model portfolios or managed accounts valuable to their needs and circumstances.
“It is as important to understand your own needs as it is in understanding what is provided by a research house and the ‘how and why’ that sits behind it. Being on top of both sides of this equation will go a long way in helping to provide an outcome that will add value to an adviser’s business,” he said.
Beyond the methodology, Mr Fechner encourages advisers to consider the needs and preferences of their own clients when evaluating reporting styles, recognising that "different reports and structures will resonate with different clients”.
When engaging with research houses, Mr Fechner suggests advisers ask targeted questions to understand their philosophy, approach and points of difference. He also stresses the importance of assessing the alignment between the research house's offerings and the adviser's client base.
When deciding which research house to potentially partner with, Mr Fecher said “This is similar to what a research analyst may ask a fund manager when deciding with whom to partner,” he said.
Mr Fechner suggests asking research houses these key seven questions:
- What is your investment philosophy and research approach?
- What are your points of difference and competitive advantages?
- How frequently do you review and update your information and reports?
- What is the range of services, information, reports and tools you provide?
- Do you offer flexible subscription options or a complete package?
- How does access/subscription work, and is it limited to specific individuals?
- What are your fees and cost structures?
By carefully considering their own needs and thoroughly evaluating potential research partners, advisers can forge a successful partnership that adds value to their business and enhances client outcomes.
“At the end of the day, it’s about marrying up your own needs and client base with what a research house does and can provide, so that your overall offering and service to your client base is improved," Mr Fechner said.
