Adviser Spotlight

On 3 November, we announced our plans to acquire AdviserLogic, an Australian financial planning software platform that will broaden our product suite and expand our set of capabilities for independent financial advisers.

Contributor Michael Pompian introduces a new series that examines the relationship between the “Big Five” personality traits and the behavioral biases of investors. The “Big Five” model is a classification scheme that attempts to cover the major aspects of one’s personality.

There’s a huge need for great investing advice, and great advice begins with us. Not just with Morningstar, but with the institutions building investment products; with the plan sponsors trying to help a workforce unlock the power of their retirement plans; and with the advisers who face the push and pull between serving clients and building successful practices.

Bear markets typically have four stages, John Rekenthaler says, drawing lessons from
Black Monday, and the global financial crisis to explain the coronavirus crisis.

Morningstar head of behavioural science Steve Wendel on why we don’t just owe it to ourselves
to stay calm as we weather the storm. We owe it to one another.

Hear from Jamie Wickham, Morningstar Australasia Managing Director, as he discusses the ever-growing importance of Morningstar’s values and what we stand for.

Relatively flexible, or unconstrained, fixed-interest strategies have touted their capacity to handle higher-bond yields better than more-traditional options. Our prior research has found some validity to these claims, albeit in a limited sample size. There were more opportunities to test this in 2018. We consequently investigate whether this has remained true and discuss the implications for using these vehicles in portfolios.

The 2019 Australian Morningstar Awards took place last Friday evening at the Establishment in Sydney. Congratulations to Vanguard for taking out the overall Fund Manager of the Year, and all our category winners. All winners in the Morningstar Awards have demonstrated themselves to be good stewards of investors’ capital.

The Federal Treasurer has announced a public consultation into whether advisers can accept selling fees on LITs and LICs to address potential conflicts and compliance with best interests duties.

From the SARS outbreak in 2003 to the twin strikes of ebola in 2014 and 2016, and a bout of Zika in between, disease has made headlines and jostled markets. In this article, we take a look into the impact and opportunities created by the coronavirus.

There is widespread optimism around the move to independence and the professionalisation of financial advice, yet the immediate uncertainty and unravelling of the landscape following the Banking Royal Commission, is causing many advisers to rethink their business models and even their careers.

Advice is evolving at a rapid pace—shifting from a world of product distribution to true client-centric advice. Today, the conversation is focused on the clients’ goals and aspirations. Advisers will spend less time selecting products and building portfolios and more time supporting their clients through the inevitable ups and downs of markets, helping them stay the course to meet their goals.

After a long period of growth, both performance and assets have tailed off for real listed assets since 2016, raising the question of whether they’ve seen their best days for the time being. Recent analysis from our Manager Research Team reveals some significant shifts worth noting for clients with portfolio exposure to this sector.

Sustainable investing can offer tremendous opportunity for financial advisers and asset managers, alike. Interest in the field is significantly growing among investors – particularly investors who are young, female, or more affluent.

While well-intentioned, the industry’s current approach to matching investors to appropriate investments is incomplete. To help, Stephen Wendel, Head of Behavioural Science at Morningstar, outlines how you can better manage your risk-averse clients during times of market volatility.

Australia’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry serves as a stark reminder of the importance of stewardship in evaluating a managed investment product. See how we rate the “big 5’s” stewardship of their funds management business’.

Morningstar survey explores the priority and pain points of marketing for financial advisers. We explore what’s holding advisers back from effective marketing.

Investors want more information and further education to help them effectively use ETFs. It’s worthwhile revisiting the 10 rules of thumb for ETF transactions that we published in 2015. Every rule remains just as relevant in 2019, and we wouldn’t be surprised if these rules remain relevant for years to come.

Coronavirus is affecting the global economy to a greater degree than any previous event. Global supply chains are so interwoven that the initial disruption in the world’s largest manufacturing centre triggered a meaningful slowdown in world trade and economic activity.

Investing was once relatively straightforward for highly-conservative investors. Fast forward to 2020, there is nowhere to hide that gives capital security, a return greater than inflation and avoids a continual drawdown on a pension.

Between social media, financial news outlets, stock apps, and word of mouth, today’s investors have no lack of information. In this environment, financial advisers can no longer view access to data or investment options as the biggest service they provide, as investors are now craving holistic advice that will effectively help them achieve their personal goals.

To meet this demand, financial advisers need to increasingly think of themselves not only as investment advisers, but also as financial coaches.

Just a few years ago, advisers would only discuss ESG investing with clients and prospects after they were asked about it. Today, these advisers incorporate ESG strategies into their practice just as they would any other kind of investment strategy, and they’re asking most, or even all, clients about their interest in ESG investing.

This shift, which advisers say has built momentum over the past three years, has coincided with a change in the ESG investment landscape.

The shock defeat of the Bill Shorten-led Labor Party has reversed negative sentiment and boosted the share prices at private health insurers NIB Holdings (ASX:NHF) and Medibank Private (ASX:MPL). The Coalition’s upset win scuttled several policies that would have likely increased member outflows and slashed margins.

It’s important to understand that risk-factor models are at their most powerful when you use them to look into the future, rather than seek to explain the past. The past track record of returns for a fund or manager will not help you identify the current exposure of a fund’s holdings.

While the return of volatility in 2018 might provide some short-term discomfort, history has shown it is a fundamental feature of small-cap investing that investors should be prepared for. Indeed, it is within a more volatile environment that good active managers are given the opportunities to add significant value over the long term.

Scenario analysis and stress testing are essential tools for managing long-term expectations and exploring shorter-term volatility. They can help tackle ‘what if’ scenarios that could derail a client’s plans. But what is the best approach to modelling future returns of your portfolios?

Opportunities often appear in markets. With sufficient scale and research resources, flexible mutli-asset funds should in theory be able to make the most of these opportunities by tactically tilting their portfolios at opportune moments.

We believe bond yields will eventually trend higher and revert to our estimate of fair value, but no one can predict the path or timing. The danger here is trying to time the market by exiting bonds in an attempt to re-enter when interest rates normalise. Find out how we’re currently thinking about bonds and positioning our portfolios accordingly.

The federal leadership spill in August has shortened the odds of Labor gaining office next year. And that prospect has sparked concern with Labor’s vow to axe cash refunds for excess franking credits. But what action, if any, should you take to prepare for the possible impact to your clients’ portfolios?

Strategic-beta fixed-income funds attempt to deliver better performance than traditional market-capitalisation-weighted index funds, or a specific outcome like a constant duration. These strategies often seem more intuitively appealing than the alternative of owning a broad market-cap weighted portfolio but there are 6 key factors that advisers need to consider before deciding whether to include these strategies into a client’s portfolio.

Many of your clients may be financially stable or very well-off but are still tormented by their finances. As advisers, how can you help these clients reduce their financial anxiety and even improve their financial well-being? To answer this question, we explored the power of social comparisons and identified a few ways that you can use this natural tendency to help clients.

Active ETFs are the latest phase of a passive revolution in the Australian investment market. Last year assets under management in Aussie-listed ETFs grew by more than 30 per cent; proving low cost options are gaining popularity fast. Australia’s ETF sector broke through the $40 billion barrier in August to reach another new record of $41.5 billion.