Smartshares released data showing that, across the four key strategies for New Zealand investors, active managers underperformed in October. Stevens said the same looked to have been true of November, too.

He said a growing number of retail investors clearly understood passive investment strategies, as demonstrated by the growth of platforms Sharesies and InvestNow. They factored in cost as an important part of their investment plans, he said.

“Active managers are talking about how much cash they’re keeping in portfolios at the moment – that’s an expensive way to hold cash.”

Passive investors had got the message that their investments would follow market movements up and down, he said, and were prepared for market turbulence. By contrast, active investors might have higher expectations of their managers - and could be disappointed.

He pointed to international research that showed that through periods of volatility there were bigger outflows from active funds.

“Investors assume their managers will perform well in volatility because they’re paying for the service, for active managers to manage the crises. When that doesn’t happen they get upset and take their money out. Passive investors know it will go up and down and that’s what happens.”

Advisers would have a role as a psychological coach for clients, helping them stick to their plans through market wobbles, he said.

New Zealand is still lagging international trends with only 2.6% of open-ended fund assets in passive investments, compared to about 20% globally.

Stevens said many advisers had traditionally seen a role in stock selection but research indicated that their value for consumers would come from the choices they made about asset allocation.