Lonsec’s research into the use of SMA platforms found both “larger banks and specialist financial services companies” are committed to growing their SMA business over the next two years.
“Usage of SMAs will likely grow thanks to both greater demand from advisory groups and other investors and to new competitive solutions that are delivered by banks and other companies that are strategically committed to SMAs,” Lonsec general manager Michael Elsworth said.
Mr Elsworth said the large banks surveyed in its research view their SMA platforms as adjuncts to their wrap administration platforms, generally offering a narrower range of platforms.
“Meanwhile, specialist financial services groups, with strong orientation towards technology, are competing with the established players, in part offering a more extensive range of model portfolios,” he said.
Lonsec said it had taken a two-pronged approach to the research, reviewing investment managers and their model portfolios while also looking at the administrative services provided by the platforms and the underlying technology.
It also said it found SMA operators are not all alike in the ways in which they communicate with model portfolio managers, nor are they alike in the ways they communicate with advisers and investors.
“This new research defines the languages and key concepts underlying SMAs in Australia and we expect the research to grow and become a sector in its own right over coming years,” Mr Elsworth said.
the points raised have a sense of reality for parts of the market. However SMA’s also offer consumers a better sense of control and tax outcomes that suit the development of say the smsf market – so its logical to embrace the development rather than have a throw away view that it’s all self interest. Imagine an smsf Trustee being channeled into an MIS on a platform and arguing its progress. Not really.
Spot on Gerry. There are numerous examples of dealer groups creating SMA’s and setting the investment fee which includes margin for them.Never underestimate self interest – it is always trying.
I’m seeing growing demand, not from advisers though…more like from their dealer groups creating product so they can clip a margin. Watch and learn as APLs slowly or even quickly in some cases get squeezed and policies are launched making it difficult for advisers to employ specific portfolio allocations for clients. The dealer group heads don’t want advisers picking investments…”we want our advisers to focus to strategy” (which means we need more revenue from product ownership). You can blame FoFa for some of this.