Bringing you live news and features since 2013
Bringing you news, views and analysis since 2013

10553

ASIC reviews asset consultants

RELATED TOPICS​

As part of its focus on gatekeepers to the financial services industry, the Australian Securities and Investments Commission has conducted a review to consider the role of asset consultants in the superannuation and managed investments sectors.



The review’s aim was to increase ASIC’s understanding of this sector by considering compliance by participants with the conditions of their Australian financial services (AFS) licences, as well as other financial services laws.

The review focused on business models, the associated risks and risk management. The roles that asset consultants play in ensuring compliant behaviour by others in the financial services industry, such as responsible entities and super trustees, was also considered.

For this review, asset consultants were defined as entities which provide financial product and investment advice to wholesale clients in return for some financial benefit.

ASIC commissioner Greg Tanzer (pictured) says: “While there were no apparent significant or systemic issues of concern warranting an immediate regulatory response, we did identify conflicts of interest present in the business models reviewed which need to be managed appropriately.”

These conflicts included fee structures based on preferring services and in-house funds as well as other products of related parties of the asset consultant. In some circumstances, asset consultants had to recommend products to multiple clients where capacity to participate in these products might be limited.

Regulatory Guide 181 Managing conflicts of interest (RG 181) provides guidance for controlling, avoiding and disclosing interests in order for asset consultants to comply with their statutory obligation to managed conflicts of interest. ASIC intends to include conflict of interest examples for asset consultants in updates of RG 181 shortly, to provide guidance to the asset consulting industry on these key issues.

“Asset consultants provide advice to both superannuation trustees and responsible entities and are integral to the investment decisions made by these entities,” Tanzer says.

Tanzer summed up the findings as generally positive, saying “The asset consultants we spoke to demonstrated an awareness of, and compliance commitment to, their contractual and licensee obligations.

“We gained some valuable insights, one of which suggests a growing trend towards in-house some or all investment management functions. This sector also seems to be seeing a decrease in clients (for some asset consultants) as a result of merger and consolidation activity and a practice of using asset consultants for advice on discrete asset types or managers.”

Significantly, asset consultants communicated a change in thinking post GFC regarding the allocation of certain asset classes and their diversification. A continuing challenge for the industry was being able to identify growth assets over different time periods and substantially divergent views were presented by the entities which ASIC consulted.

Asset consultants also expressed a concern regarding the short term focus of some clients, including superannuation trustees, and encouraged clients to consider the longer term objectives and performance of their portfolios, and avoid being overly concerned with month to month peer surveys.

Latest News

Irish domiciled funds surpassed EUR4.3 trillion AuM (Assets under Management) at end-March 2024, a 15..
New analysis by London-based Nickel Digital Asset Management reveals 38 listed companies with a combined..
Bloomberg has announced that for the first time, its proprietary Bloomberg Second Measure (BSM) transaction..

Related Articles

Global ESG Investing
On May 15 Florida’s Republican Governor Ron DeSantis signed legislation that furthers his ongoing campaign to oppose the role of climate change and ESG factors in state policymaking...
On May 15 Florida’s Republican Governor Ron DeSantis signed legislation that furthers his ongoing campaign to oppose the role of..
Trends
The trend to buyout among the UK’s smaller defined benefit (DB) schemes continues with a slew of new sub GBP100 million deals announced this month alone...
The trend to buyout among the UK’s smaller defined benefit (DB) schemes continues with a slew of new sub GBP100..
Different flavours
In what is believed to be the first survey of its kind in the UK market, Nedgroup Investments, the investment-led, multi-boutique global asset manager with over USD20 billion under management, recently undertook a survey with 204 UK investment professionals, seeking insights into their perceptions and attitudes towards boutique asset managers...
In what is believed to be the first survey of its kind in the UK market, Nedgroup Investments, the investment-led,..
UK map
UK local government pension schemes (LGPS) are leading the charge on investment in private markets issuing tenders set to be worth billions of pounds in the coming years...
UK local government pension schemes (LGPS) are leading the charge on investment in private markets issuing tenders set to be..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by