During the past 3 years Charlie has worked tirelessly to reshape and strengthen the business lines and expand Lonsec Research, SuperRatings and Lonsec Investment Solutions. This period has seen significant uplift in capabilities across all business units and the Board is committed to seeing the business build upon this solid foundation.

The Board of Lonsec sincerely thanks Charlie for those efforts.

Charlie believes that the time is now right for him to exit the business and pursue his other interests and to enable a new CEO to come on board to lead and drive the next phase of Lonsec’s growth plans.

There will be a smooth transition to a new CEO, with Charlie continuing in the role through to 30 June this year. The Board has commenced a search for a new CEO.

Lonsec is also announcing that Mark Spiers has been appointed Chairman of the Board.

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The results highlight the success of Lonsec’s research-backed managed account model, which combines Lonsec’s portfolio construction expertise with Australia’s largest investment product research team.

Lonsec CEO Charlie Haynes said more advisers were turning to Lonsec for a professional, actively managed investment solution, whether off-the-shelf or tailored to a licensee or practice’s needs.

“The success of our managed portfolios comes down to three things: our investment philosophy, the diversity of expertise on our investment committees, and our research capabilities,” said Mr Haynes.

“Our active approach to asset allocation and asset selection, coupled with our ability to identify high-quality investments based on our extensive research coverage is proving attractive to advisers.”

The growth in Lonsec’s managed accounts reaffirms the importance of knowledge as well as execution, positioning the company as a major provider of investment solutions, along with its traditional research offering.

Part of the appeal is the breadth of Lonsec’s solutions, including diversified multi-asset portfolios, objectives-based retirement portfolios, listed portfolios, and direct equity SMAs. All are underpinned by the same proven philosophy and dynamic approach to portfolio management.

“Lonsec is known for its research and investment insights advisers and investors can trust, but more and more advisers are approaching Lonsec as a one-stop-shop for their investment solution needs,” said Mr Haynes.

Lonsec will add to its suite of investment solutions with the imminent launch of its Sustainable Managed Portfolios. These draw on Lonsec’s latest sustainability research to construct high-quality, risk-managed portfolios that target sustainable themes.

“The Sustainable Managed Portfolios are a great example of how Lonsec continues to develop its offering to meet a wide range of investment needs,” said Mr Haynes.

“We want to help advisers provide a genuinely sustainable investment solution that aligns to their clients’ values and investment objectives.”

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Lukasz de Pourbaix

Lonsec has partnered with AMP to make its Retirement Managed Portfolios available via MyNorth Managed Portfolio.

The portfolios harness the depth and breadth of Australia’s leading research provider, allowing users to build high-quality retirement solutions incorporating Lonsec’s best investment ideas. Underpinning the portfolios is Lonsec’s strict quality criteria, requiring funds to be rated ‘Recommended’ or higher by its investment research team.

“Our managed portfolios give financial advisers access to investment solutions supported by one of Australia’s largest investment research and consulting teams,” said Lonsec CEO Charlie Haynes.

“Being able to draw on our investment selection and portfolio construction expertise is a real plus, and we’re proud to be able to extend this access via the North platform users.”

Lonsec’s Retirement Managed Portfolios are objectives-based and focused on delivering an attractive and sustainable level of income while generating capital growth through a diversified portfolio of managed investments.

Lonsec offers three Retirement portfolios: Conservative, Balanced and Growth. Each are designed to achieve different risk and investment objectives over various timeframes. They are constructed using a range of funds that play a specific role, such as income generation, capital growth and risk control, and backed by Lonsec’s rigorous governance and review processes.

“Our Retirement Managed Portfolios have been constructed to manage the risks most relevant to investors in the retirement phase,” said Lonsec’s Chief Investment Officer Lukasz de Pourbaix.

“By diversifying across asset classes, managers and return sources, we aim to manage risks such as capital drawdown, which can materially impact the longevity of a retirement portfolio, particularly in the early stages of transitioning from superannuation to the pension phase of investing.”

“We’re very excited to be working with AMP to make these portfolios available to AMP’s North wrap users.”

Inclusion on North further expands the distribution of Lonsec’s Managed Account offering, following its existing availability on the BT, Macquarie, HUB24, Netwealth and Praemium platforms.

Lonsec’s retirement portfolios have been constructed to meet the income and capital objectives of investors in the retirement phase as well as to manage risks that are specifically relevant to retirees.

AMP’s North platform offers advisers flexible and efficient access to a range of investment products, which now include Lonsec’s retirement portfolios, giving advisers the tools they need to meet their clients’ goals.

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According to leading research house Lonsec, the Code now requires advisers to demonstrate that they are acting in their client’s best interest while avoiding even a ‘perception’ of conflicted recommendations.

“For advisers the FASEA standards are no longer an intellectual exercise. Despite the practicality issues, they are now the yardstick against which they will be judged by regulators, clients and the community,” said Lonsec CEO Charlie Haynes.

“The reality is that the only way an adviser can comply with the standards effectively and efficiently is to access quality investment research and technology tools that enable them to provide detailed product comparisons across all asset classes, including superannuation funds and investment options.

“This goes to the heart of Standard 9 of the Code of Ethics, which requires advisers to make recommendations with competence.”

Lonsec also foreshadowed that conflicted remuneration, even if an adviser considers it to be minor, manageable, or largely irrelevant, could put licensees in breach of the standards.

Standard 3 of the FASEA Guidelines states that an adviser is in breach “if a disinterested person, in possession of all the facts, might reasonably conclude that the form of variable income could induce an adviser to act in a manner inconsistent with the best interests of the client.”

This means that all conflicts, even a preference to use an in-house practice or dealer group product, could be viewed as an inducement to act in a way that isn’t in the client’s best interest.

“Avoiding even perceived conflicts is now a requirement for advisers, so practices should strongly consider moving to a conflict-free environment to safeguard their position,” said Mr Haynes.

“Lonsec is now offering to solve this and help advisers moving forward by acquiring the investment management rights from existing portfolios and to manage the investment process on behalf of the adviser without ongoing conflict.”

Standard 6 also raises the bar for advisers, stating: “Where your clients indicate they only wish to invest in ethical or responsible investments, you will need to consider whether limiting your product recommendations in this manner is appropriate.”

According to Lonsec, meeting this standard means going beyond recommending branded ‘ethical’ products to understanding exactly what the product invests in and whether this indeed aligns with the client’s expectations.

“Advisers now have a legal responsibility to ensure their client’s preferences are taken into account,” said Mr Haynes. “For example, if the client doesn’t want fossil fuels in their portfolio, simply recommending an ESG product probably won’t be sufficient from now on. The adviser needs to have a complete understanding of the product’s underlying investments and its process.

“That’s why Lonsec is introducing a new sustainability rating and will provide data on how individual investment products stack up against the United Nation’s 17 Sustainable Development Goals. We want to give advisers all the tools and information they need to deliver advice that they can clearly demonstrate meets the FASEA standards and their best interest duty.”

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Lonsec will continue to assess fund managers’ processes against the principles of Responsible Investing as part of its investment rating, however will also introduce a new rating to go beyond Environmental, Social and Governance (ESG) labels by analysing the underlying products and services provided by the companies in their portfolio and their compatibility with the United Nation’s 17 Sustainable Development Goals (SDGs).

Lonsec said this will help financial advisers select genuinely sustainable products that are aligned with their clients’ values.

“There’s a growing desire among advice clients for investment solutions that don’t just take ESG factors into account, but put their money where their mouth is and actively consider the broader social and environmental impacts of the holdings in their portfolios,” said Lonsec CEO Charlie Haynes.

“Part of the challenge is giving advisers and their clients access to the right information. At the moment there’s a real lack of transparency that makes it difficult for investors to understand exactly what they’re investing in.”

According to Lonsec, while ESG investing has entered the mainstream, it doesn’t always result in outcomes that clients expect. Traditional ESG incorporates these factors into the investment process, but it doesn’t necessarily exclude unsustainable activities – or favour sustainable ones. Most approaches allow the investment into ‘unsustainable’ companies if the ‘price is right’ or corporate engagement is deemed to be positive. This does not necessarily align with investor expectations.

“Lonsec is a strong advocate of incorporating ESG into the investment process, but given the broad range of ESG approaches used by managers, it’s important that investors are aware of what it means for their own portfolio,” said Tony Adams, Lonsec’s Head of Sustainable Investment Research.

“The risk of ESG investing is that it can result in a ‘greenwashing’ of portfolios. Investors might see an ESG label and assume that it’s only investing in sustainable activities, but this is almost certainly not the case. You have to dig deeper to understand how the investment manager defines ESG, how they use it in their investment process, and how it impacts the final portfolio outcomes.”

Lonsec’s new sustainability ratings and reports will be made available through its award-winning iRate platform, allowing advisers to understand how their investment decisions line up against the UN’s 17 SDGs, while demonstrating to their clients how their advice fits with their values and preferences.

“We’re excited to be able to offer this new capability in partnership with Sustainable Platform,” said Mr Haynes.

“Our iRate platform is more than just research. It gives users the tools to create tailored portfolios based on a range of qualitative criteria that now includes the proper delineation between responsible investment managers and sustainable investments.”

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Lonsec releases Super Asset Allocation Comparison tool

Financial advisers must have a thorough understanding of where superannuation products allocate funds rather than relying on labels to make recommendations, according to leading research house Lonsec.

There has been a long-running debate on how certain asset types should be categorised, with investment managers and super funds often having different stances on which assets to include in an investment option and the proportion of members’ funds that should be allocated to them.

The challenge for advisers is that two super funds might offer a ‘balanced’ option, each with significantly different asset allocations leading to diverging retirement outcomes. Failing to understand an investment option’s actual asset allocation can also mean there is a risk that the option does not meet the licensee’s policies and guidelines, resulting in potential non-compliance.

“Super funds use labels like ‘growth’ or ‘defensive’ to characterise an investment option’s asset allocation, but often these don’t tell the full story,” said Lonsec CEO Charlie Haynes.

“Understanding the underlying asset allocation, how it aligns to a client’s risk profile and how it compares to peers is essential for financial advisers who have a duty to act in their clients’ best interests.”

To assist advisers in navigating the asset allocation question, Lonsec has launched the Super Asset Allocation Comparison tool, which enables users to compare asset allocations across individual investment options. The tool is powered by SuperRatings and based on the most in-depth survey of Australia’s superannuation product market.

The Super Asset Allocation Comparison tool allows users to compare the asset allocations of up to five fund options and benchmark them against Lonsec’s own strategic and dynamic asset allocations. The tool is available via iRate – Lonsec’s market leading investment research platform – and is designed to give advisers a clear view of where funds are allocated and whether it is the right fit for their client.

“It’s not our job to tell advisers which asset allocation is most suitable for their clients, but we can make sure they have access to all the information they need to make a fully informed recommendation,” said Mr Haynes.

With comprehensive research and data across investment and super products, Lonsec is uniquely positioned to help advisers navigate the best interest landscape.

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Due to the rapid expansion of our managed accounts business, coupled with the ongoing growth of our iRate® research platform, Lonsec is expanding its business development function and is excited about having someone with Tony’s credentials join the group.

“Managed accounts are increasingly seen as a solution to many of the challenges facing advisers and they continue to gain acceptance. Lonsec is ideally positioned to take advantage of this development,” said Lonsec CEO, Charlie Haynes.

“Our previously announced strategy to assist conflicted groups by taking over the investment management responsibility for their managed account solutions will be a key part of Tony’s remit, together with extending our relationship with key wealth management institutions.”

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Lonsec is offering to acquire in-house managed portfolios from advice licensees.

Leading research house and managed account provider Lonsec will work with financial advisers seeking to transition from conflicted advice models and introduce a greater degree of independence in their investment decisions.

Lonsec is offering to acquire in-house managed portfolios from advice licensees to enable them to take advantage of best practice governance principles and Lonsec’s experienced team of portfolio construction experts.

With a shift currently taking place in the advice industry in the wake of the Royal Commission into Financial Services, Lonsec said advisers are acutely aware of the need to present a professional, conflict-free advice environment for their clients.

“Advice models have come under a great deal of scrutiny by the Royal Commission as well as the regulators and the community,” said Lonsec CEO Charlie Haynes.

“The Royal Commission may have stopped short of a ban on vertically integrated or conflicted financial advice, but advisers know they need to start moving quickly in this direction to meet community expectations.”

While it is becoming increasingly unpalatable for licensees or advisers to charge portfolio management fees for in-house managed accounts, advisers are also cognisant of regulatory developments.

An empowered ASIC is investigating how platform providers ensure the integrity of managed accounts constructed by advice licensees who might lack the expertise or resources to act as specialist investment managers.

For many advisers, the question is how best to manage conflicts, either by outsourcing the portfolio construction process or introducing a greater degree of independence in their investment decisions.

Lonsec is proposing to acquire the investment management rights from existing managed account providers, enabling them to focus on the provision of advice without conflict.

Licensees have the flexibility to retain their existing branding, investment mandate and platform, or transition to Lonsec’s own professionally managed portfolios incorporating best ideas and insights from Australia’s leading investment product research house.

“An outsourced managed account solution is becoming increasingly popular, not just in order to reduce conflicts but to allow advisers to focus on their clients’ needs and aspirations while leaving the investment process to specialised portfolio managers,” said Mr Haynes.

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It’s critical for the advice industry to stay ahead of the regulatory curve.

Financial advisers are now able to access investment research, encompassing clients’ whole of life needs, with the announcement by Lonsec of the inclusion of superannuation fund research in its iRate platform.

The research is provided by SuperRatings, Lonsec’s specialist superannuation product research team, which has provided in-depth superannuation fund benchmarking and research for over 20 years.

To date financial advisers have lacked an end-to-end investment research solution that provides superannuation fund research along with managed funds, equities, Separately Managed Accounts (SMAs), listed securities, and individual super fund investment options.

The inclusion of SuperRatings research in the Lonsec platform addresses this gap, giving advisers access to whole of cycle investment research that enables them to gain a full picture of their client’s portfolio while helping them address potential regulatory blind spots.

Lonsec CEO Charlie Haynes said it was critical for the advice industry to respond to the call for increased professionalism and stay ahead of the regulatory curve.

“Advisers are wary of superannuation advice becoming the next flashpoint in the ongoing push to professionalise the industry,” said Haynes. “Even well-educated and well-resourced advisers could end up in hot water if they cannot clearly show how their superannuation and investment advice is in the best interest of the client.”

Lonsec’s superannuation fund research allows advisers to efficiently compare more than 600 superannuation products across over 300 different fund characteristics based on the most extensive fund benchmarking survey conducted in the Australian market.

The aim is to make it easier for advisers to meet their best interest duty, especially when it comes to superannuation product switching, which requires the adviser to clearly explain how the change benefits the client.

“Justifying a particular product recommendation means being able to explain how it stacks up across a wide range of criteria, such as the member servicing environment, insurance coverage and cost, and fund governance and administration,” said Haynes.

“That’s why we’ve made this research available to advisers – to make it easier for them to gain a deeper understanding of super products and to satisfy themselves, their clients and the regulators that their recommendation is the right one.”

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Mr Hardy joins Lonsec after seven years at Clime Asset Management, most recently as Chief Operating Officer, and brings over 30 years of experience in sales, marketing and business leadership across a number of industries, including as head of the International Direct Marketing Division of Time Warner.

As Executive Director, Mr Hardy will lead Lonsec’s combined sales and marketing efforts, supported by an experienced team of relationship managers, client service professionals and marketers.

“I’m very pleased to announce Rob as our new Executive Director of Sales and Marketing,” said Lonsec CEO Charlie Haynes. “Rob’s wealth of experience both inside and outside the financial services domain will allow us to have deeper conversations with our clients to better understand their needs during a critical time for the industry.”

The appointment forms part of Lonsec’s new executive structure which establishes greater unity between the Lonsec Research, SuperRatings and Investment Solutions businesses, to provide more holistic investment solutions.

“I’m very excited about the opportunities for Lonsec within a financial services industry undergoing significant change,” said Mr Hardy. “I look forward to leveraging the strong relationships we have with advisers, fund managers and super funds, and driving the continued evolution of our investment research and tools in line with the industry’s future needs.”

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