NZ financial advisers rate fees and costs as the most important factor in choosing investment funds, according to a new Kernel Wealth survey.
The Kernel poll found 75 per cent of advisers consider ‘fees and expenses’ as most critical in selecting investments – just ahead of diversification (73 per cent) and performance history (70 per cent).
Among other results, due to be pored over at the inaugural Kernel adviser symposium next week, the survey also shows about two-thirds of respondents build client portfolios based on third-party models (such as investment consultant-designed solutions).
Just under half of those surveyed also create their own bespoke portfolios while 11 per cent “use diversified funds only”.
Index funds come out on top as the favoured investment product for advisers grilled by Kernel with 83 per cent using passive funds in client portfolios: three-quarters of respondents also use exchange-traded or unlisted managed funds.
The survey shows about half of the adviser audience also include direct shares and bonds in client investments; alternative investments (37 per cent) and structured products (22 per cent) have some support, too.
However, the majority of advisers (75 per cent) mingle both active and passive products – only 8 per cent exclusively use actively managed funds and 12 per cent follow a pure index approach.
The study also suggests that “a reset has taken place” in the NZ financial advisory sector with many independent businesses eager to expand.
According to Kernel, the survey “underscores the sector’s need to evolve, with many practices expressing untapped capacity and an inefficient segment in their client base”.
“This gap signals a missed opportunity for the advice sector to leverage technology for more efficient and value-added client outcomes.”
Kernel chief, Dean Anderson, said the low-fee passive fund manager has seen an uptick in flows from advisory groups with many including its products in model portfolios.
Anderson said the group should shortly hit the $1 billion mark after just passing $800 million in funds under management including $120 million plus in its KiwiSaver scheme.
The Kernel adviser conference is set down for Tuesday February 27 at Auckland’s Pullman Hotel.