Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
Evergreen Ratings – a new player in research
A busy year for investment researchers just got busier, with Evergreen Consulting launching its own investment research arm, Evergreen Ratings. This follows a number of acquisitions and asset sales in the sector. The group will run alongside the existing Evergreen Consulting business, which was founded by the irrepressible Angela Ashton.
Evergreen Consulting has quickly built a diverse client base of financial advisery firms following its inception in 2016, but has been seeing increasing opportunities outside of traditional bond and equity markets. On this, Ashton says, “we are constantly being asked to review these types of investment vehicles, either by our clients or by the managers issuing them.” The key driver of this interest has been the combination of three factors.
Firstly, bond market valuations have reached all-time highs and interest rates all-time lows. With it being almost certain that interest rates will be higher five (or ten) years from now, the value of a traditional ‘long-duration’ bond portfolio is being questioned by clients and advisers alike. The second factor has been the amazingly quick recovery of equity markets post-COVID Crash, in a very short period of time, with many pundits suggesting they are now overvalued. Finally, the wide-ranging cuts to dividends in Australia and across the world has seen a flood of investors seeking yield wherever it is available.
The natural and most popular option for advisers has been in alternative asset markets, which range from private equity and venture capital, to private credit and property syndications. Yet the March sell-off showed that not all of these are created equal, with many strategies performing worse than equity market strategies.
Despite the growing popularity and huge demand for opportunities in the ‘alternatives’ space, which can make up as much as 30%-40% of traditional industry or pension fund portfolios, obtaining access on these investments is at best hit-and-miss.
Enter Evergreen Ratings.
Most of Australia’s research houses baulk at the work involved in assessing these more complex and less transparent structures. Evergreen on the other hand sees opportunity in the complexity, saying “they require significant resources and skills sets to assess them properly”. Something it has in spades.
The Evergreen Ratings team will be led by first-class consultants Daniel Liptak and Mark Wist, both of whom have over twenty years’ experience across investment markets. Liptak previously founded the Alternatives Research Team at Zenith Investment Partners and Wist has an extensive background in direct property.
Evergreen Ratings will focus on the closed-end, illiquid and liquid investment vehicles made available to so-called ‘wholesale investors.’ It will offer more sophisticated financial advisery groups with support for their own due diligence on strategies including hedge funds, absolute return and credit strategies. Â
On the opportunity in the sector, Ashton says: “Many of these vehicles offer opportunities that are difficult to get in a standard managed funds format, such as high levels of consistent yield. This becomes all the more relevant in today’s highly uncertain economic scenario.”
Evergreen Ratings has already been commissioned to write four research reports.
