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A growing number of advisers have abandoned traditional platforms in favour of alternative options, delivering better bang for buck.


It has reportedly taken BT Financial Group two years, 200 people and approximately $150 million to deliver the first part of its next generation Panorama platform. For that kind of investment, Panorama’s cash hub better be pretty spesh. Reports indicate planners will have to wait another two to three years for other functionalities including managed accounts, a wrap account and an SMSF offering.

While the banks have been busy enhancing old technology and building their direct retail offering, their hold on the investment management and administration market has diminished.


For many advisers who recommend direct shares, traditional wraps don’t cut it. For starters, the investor directed portfolio service structure around wraps is irrelevant when using direct investments where the assets are held in the client’s name.

Furthermore, wraps were built with managed funds in mind. They’re effectively a managed funds supermarket. Years later and with much reluctance, direct equity functionality was bolted on. As a result, platforms have weak trading capabilities. Some don’t even allow investors to buy stock using cash from sales until the sale settles. That’s difficult to explain to savvy clients. Wraps also lack the necessary modelling tools and capabilities to enable advisers to trade efficiently on behalf of clients while achieving greater scalability and practice efficiency.

These are the reasons why many sophisticated clients and SMSFs don’t use traditional platforms.

Advisers who deal with SMSFs know their clients want greater control, customisation, transparency and flexibility. As they inch closer to retirement, clients also want to minimise costs. If the overall cost of the financial planning experience is somewhere between 2 and 2.5 per cent, and investors want to cut out some costs, then administration fees are the most obvious, and possibly appropriate, place to start.

But clients aren’t the only ones driving the case for going off platform. Some advisers see the direct investment trend as an opportunity to abandon traditional platforms while holding onto the administration margin.

For example, a small practice with $50 million under advice, charging clients 40 basis points to administer direct investments via a wrap, could bring administration inhouse for less than the $200,000 per annum it pays a wrap. Cost savings could be passed onto the client or reinvested into the business.

Of course it’s more complicated than that. There are additional compliance requirements, not to mention staff must be recruited and trained, and there’s always a chance they will leave. While technology is good, it’s still not as efficient as it could be in many cases, and ultimately, the practice is responsible for reporting on, and reconciling assets. On top of that, advisers who want to exercise discretion over their clients’ portfolios need additional licensing, which is likely to require additional capital requirements.

But if the institutions are concerned about the rise of direct investing, they’re not showing it. There doesn’t seem to be a sense of urgency to boost the efficiency of existing platforms. Meanwhile new players have entered the arena such as the ASX’s mfund Settlement Service and a number of boutique managed account providers.

The ASX built mfund with the $520 trillion SMSF sector in mind. It hopes the service, which provides investors with access to unlisted managed funds that invest in a variety of asset classes and investment strategies, will help trustees build more diversified portfolios. The issue with mfunds is that SMSFs want more direct investments. Only time will tell with this new initiative.

 Paul La Macchia is business development manager at

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