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23 September 2011

The Ian Sayers Blog

"When advisers have heard about the income track records of some investment companies (40 plus years of growing dividends), how investment companies are really the only game in town for exposure to asset classes such as private equity, and the more logical choice for property, they have begun to see opportunities for how they can demonstrate greater value to their clients."

At the AIC, we hope that RDR will bring increased interest in investment companies from financial advisers.  That is why we have just launched the new AIC Adviser Centre on our website to provide advisers with the skills, knowledge and confidence to recommend investment companies as part of their client’s long-term portfolios.

But we are conscious that we need to understand better what advisers are looking for and where investment companies can fit in.

So it has been great that Morningstar, the independent provider of investment data and research, have given us the opportunity to speak at their adviser seminars around the country over the past year.

So what has feedback been like?

Well, for the most part, it has been overwhelmingly positive.

Yes, there have been a few concerns expressed about the lack of availability of investment companies on major platforms.  But the FSA’s recent announcement will move all platforms to an unbundled charging structure over time, which will make incorporating investment companies that much easier.  Indeed, the three biggest platforms have all recently confirmed plans to provide this option in time for RDR.  Given the requirements for independent advisers to take a whole of market approach, I am confident that all major platforms will offer investment companies before RDR finally arrives.

And, yes, there is some reticence that comes with dealing with the unknown, which for many advisers is still the case with investment companies.

But when advisers have heard about the income track records of some investment companies (40 plus years of growing dividends), how investment companies are really the only game in town for exposure to asset classes such as private equity, and the more logical choice for property, they have begun to see opportunities for how they can demonstrate greater value to their clients.

And when I have put up the performance record of investment companies, and how much they have outperformed unit trusts over the long-term, I would like to think that the mood has moved from one of “why should we recommend investment companies?” to one of “why haven’t we before?”.

Maybe I am getting ahead of myself, as there is still a long way to go before an interest to know more is turned into actual demand.  But I sense there is a real change ahead.  Above all, I have been impressed by the willingness of advisers to consider what investment companies have to offer, and I hope that our Adviser Centre, and the free training programme which is its centrepiece, can deliver on their expectations.

If not, I am sure they will let us know!

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