Education, integrity key to investment management

As IFAs are increasingly expected to keep track of a cacophony of products, a new approach to investment management is gaining traction


Independent financial advisors around the world are often caught between a rock and a hard place. Not only are they expected to fully understand the needs and goals of each and every one of their clients, they are also expected to know about every product on the market, from insurance, regular savings plans, income protection, lump sum investments or pensions. As more products hit the market, an IFA must continually familiarise themselves with the best options at hand, tailor-making portfolios from a wealth of alternatives.

That alone can be a minefield. But then once the most appropriate plan is chosen for clients, the advisor then often has the rather arduous and mind boggling task of selecting the right investment funds to match their attitude to risk and growth expectations. Not only do many people expect their financial advisors to be market experts and know everything about the financial markets, they are also presumed to be skilled fund analysts who have thoroughly investigated every paragraph of every investment prospectus for any fund that has ever come across their desk.

If the markets go down, it is the advisor’s fault. If the fund has issues, it is the advisor’s fault. It can be a tough job.

The truth is, there are some very good independent financial advisors in this world, but they simply don’t have the time, knowledge or expertise to be able to accomplish these tasks when it comes to investing, and that is why they place a heavy reliance on the information provided to them by the investment houses themselves. This is often presented and explained by the fund representatives that take the time to visit them and discuss or promote the investment funds they represent.

Acorn International Fund Distribution, has been established in order to create a new breed of investment management

Problems arise, however, when it comes to retail fund sales and their representatives on an international level. There are so many investment funds to choose from, and if financial advisors are placing emphasis of selecting client investments on the information given by the fund representatives that come and visit them, how do they know they are choosing the best investment for their client?

Asset managers may have sales people pushing for institutional sales, but when it comes to a retail level, they simply don’t have the capacity. There seem to be two types of retail fund sales representatives actively ‘on the ground’ across the globe and seeing IFAs. The first group belong to the huge blue chip multi billion-dollar asset managers with many different fund offerings that can afford to have a substantial international retail sales team. The second is the more boutique fund houses that pay for their sales team, although the cost of it can hugely eat into the gross performances of the funds themselves. More and more research is showing that the best performing investment funds today are often neither of these. The asset managers really making a mark, those that are top quartile performing funds in their sectors year in year out, are those that still run hundreds of millions of dollars AUM, but just don’t have that level to afford an international retail sales team, and, are concerned about keeping their expense capital low to maximise performance and profitability of the funds they manage.

So how do advisors become aware of these funds? Chances are if they are residing in the country where the asset manager is based and they have the time to scroll through the weekly publications, they may have heard of them.

There are some third party marketing companies, and a new sales and marketing company, Acorn International Fund Distribution, has been established in order to create a new breed of investment management. A spokesperson for the firm outlined the marketplace in which they’ve identified a requirement. “We only work with funds and asset managers that have an impeccable reputation, long track record of strong performance, a credible investment team behind them, are in a regulated structure such as UCITs or SICAV, but simply aren’t at that multi billion dollar level where they can afford a huge international sales team. People often talk about ‘win-win situations’ in business, we wanted to create a ‘win-win-win-win’ situation: the asset manager gets to promote their retail funds around the world – where regulation permits – we get to work with asset managers and investment funds we truly believe in, the financial advisor gets informed about the better performing funds and regulated funds that are available to them, and the investors, should it fit their risk profile and match their investment needs, get to invest in what we consider to be some of the consistently top performing and better quality funds that they previously did not have an opportunity to do so, so everyone benefits all at once’.”

Asset managers have the ability to promote their investment funds on a retail level across the globe without having to pay a higher cost for their own international sales force. Established by two members with substantial experience of selling on international, Acorn further aims to promote responsible investing by donating five percent of annual net profits to a charity selected by the IFAs they work with. Fostering education and awareness, the company aims to build a reputation for integrity and longevity.

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