Financial advisers and their role in the distribution of funds is changing and it is changing quickly. Financial advisers were relegated to the background while single-strategy asset managers were at the fore before now. They achieved this through product sales and the influence they wielded over the advisers.

    In recent times especially after the Retail Distribution Review, it became clear that advised assets were flowing to fund managers who made investment decisions on the behalf of their clients and also into multi-asset funds. This has taken the responsibilities of asset allocation and the decisions on fund selection away from financial advisers. 

    Not a lot of advisers embrace the fact that they have become fund pickers. They have come to rely heavily on research and consultations or fund panels to build custom-made portfolios for every one of their clients. 

    The Evolving Role of Advisers

    Most financial advisers are heavily weighing in on the aspect of the behavioral coaching aspect of financial planning. They would rather associate with the tag of “financial planner” in place of “investment adviser” or “wealth manager”. The evolving role of financial advisers has caused a major change in the investment world. 

    The Influence on Advisers

    The largest influence on advisers which continues to impact their roles comes from research agencies. Advisers make use of these research agencies in their advisory roles and process. This use of research agencies has led to the emergence and growing presence of big research agencies such as Morningstar and FE fundinfo. 

    The influence of research agencies has made it possible for a financial adviser to offer custom-made portfolios. These portfolios are fast growing because of the dependence of the financial advisers on research agencies. 

    These research agencies offer more than just the comparison of funds and assessment but they have gone further to help the advisers with the location of assets and the examination of the performance of Discretionary Funds Managers. 

    There is no mistaking the influence research agencies to have over financial advisers and their assets. Two out of three financial advisers make use of the services of research agencies for the comparison and assessment of funds.  

    Taking Back Influence

    Asset managers must find ways to regain influence over advisers. They will remain in dire positions if they fail to do something. They keep losing their influence as long as financial advisers continue to work more with research agencies, discretionary funds managers, and their platforms. 

    The way for asset managers to regain influence is to find a way to establish partnerships with advisers where they provide services of risk assessment and management and back-office systems for ease in the navigation of the tough market. 

    Product providers may attempt to take back some of the influence through strategic acquisitions should asset managers fail to regain and exert some of the influence on advisers.