Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
Study of NZ advisors shows Australian dominance
(Pictured: David Chaplin)
The first comprehensive study of the New Zealand financial advisory market demonstrates a massive concentration of ownership by AMP and four Australian banks, as AMP last week increased its lead with the purchase of another four financial planning practices.
The study, “AFA Today – an Analysis of New Zealand’s Investment Adviser Market”, was conducted by David Chaplin, a specialist financial services journalist based in New Zealand and a former editor of Australia’s IFA magazine. He analyzed the data which has become available since the introduction of the “Authorised Financial Adviser” label by NZ’s Financial Markets Authority in 2008.
Prior to 2008, even the number of advisers was unknown and Chaplin says the analysis shows that it is a much smaller number than most industry participants had thought. His study identifies only 1,895 AFAs, of whom only 887 specialise in investments and 510 in insurance. A further 377 reside within stockbroking firms, which Chaplin says tend to favour direct investing in shares rather than managed funds.
In terms of the dealer groups which dominate, the study identified 130 entities associated with the AFAs either as employer, owner or part-owner, or via a branded group. Of these, 30 housed more than 10 AFAs. About 60 per cent had either one or two AFAs to their name.
At the top end of the scale, the market is clearly dominated by AMP whose 214 AFAs, including the sub-brands Spicers and AdviceFirst, represent 14.5 per cent of the total (excluding self-employed AFAs). This calculation was before the recent announcement by AMP of the purchase of four NZ firms to join under the AdviceFirst umbrella. They are: John Grogan Insurances; Advice 4 U; Bob Edwartds Insurance and Investments; and Colin Strang Financial Services.
The top 10 groups, excluding self-employed, and their share of the NZ market are: 1. AMP (14.5 per cent); 2. Craigs Investment Partners (8.2 per cent); 3. ANZ (7.2 per cent); 4. Westpac (6.9 per cent); 5. Forsyth Barr (6.8 per cent); 6. BNZ, which is owned by NAB (4.7 per cent); 7. Guardian Trust (4.0 per cent); 8. First NZ Capital (3.7 per cent); 9. ASB (3.5 per cent); and 10. Macquarie (3.0 per cent).
Chaplin said he was making the report available to interested parties but was working on a more comprehensive information product, including individual contacts, to be offered for sale.
For the full report, request via email: [email protected]
