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Planners left in the cold, says report

Planners and platform providers are being bypassed by new technology that allows customers to invest directly, according to an Arnhem Investment Management white paper.

The report reveals the extent to which ‘disintermediation’ – or the absence of middle men – is taking place in the wealth management industry.

Industry funds like AustralianSuper are offering their members direct investment options that allow them to buy shares directly through their superannuation account, replacing the typical function of a financial planner and a retail fund, according to Arnhem.

“This is likely to be enhanced in the near future by the addition of internet-based tools that will give members access to investment aids such as structured portfolios recommended by third party advisers and brokers,” said the paper.

In addition, planners face the prospect of the Australian Securities Exchange's (ASX’s) proposed AQUA market, which will allow retail investors to buy and sell managed funds themselves, according to Arnhem.

Self-managed superannuation funds (SMSFs), which represent 31.5 per cent of superannuation assets, are another area the ‘for profit’ sector of the industry is typically excluded from, said the paper.

“The highly fragmented nature of the funds and their ‘DIY’ attitude to investment makes it difficult for the retail super funds to capture these investment flows,” said the paper.