Colonial First State’s Institute of Advice, the centre of knowledge for Commonwealth Bank-affiliated dealer groups representing $35 billion under advice, is tendering its fund ratings contract amid signs the incumbent faces a tough battle.
The dealer groups – Commonwealth Financial Planning, Financial Wisdom, Whittaker McNaught and Bankwest Financial Advice – had been receiving funds manager ratings and research from Standard & Poors, however a Colonial First State (CFS) spokesperson confirmed its three year contract had expired and was being put out to tender.
The spokesperson said the internal team running the tender, lead by Institute of Advice chief John Carnavale, was yet to compile a shortlist.
However sources close to the negotiations indicated that Standard & Poors may be fighting to retain the business. S&P’s quote to provide its fund ratings – one of the few areas of financial services to not command a percentage-based fee – was understood to be $800,000 per annum, although it could not be confirmed what role price has played in the tender.
It is understood that Morningstar, to whom S&P sold its fund data business in 2007, is well placed in the negotiations.
Morningstar refused to comment yesterday. S&P’s director of fund ratings, Mark Hoven, concurred with CFS that the tender had yet to reach a shortlist stage and remains open. He would not comment on pricing.
S&P recently enjoyed some good news, being selected as the sole investment research provider to dealer groups affilliated with BT Financial Group, capitalising on its legacy relationship with St. George dealer groups, at the expense of van Eyk Research.
Hoven said it was imperative that ratings agencies evolved their service to reflect the “way the world has changed over the past three years”, particularly in the provision of more investment scenario variations, to capture the fact that capital gains would be lower in many asset classes going forward.