Print Post Approved PP255003/00299
Vol.26 No.16 | May 3, 2012 | $6.95 INC GST
The publication for the personal investment professional
www.moneymanagement.com.au
IPA’S RADICAL PLAN FOR SUPER: Page 6 | RESOURCES NAGIVATE ROCKY TERRAIN: Page 20
Insto platforms stifle competition By Lucinda Beaman FINANCIAL services players have taken aim at competition concerns and potential conflicts in institutionally owned investment platforms. Ibbotson Associates head of adviser services Matthew Esler said “certain platforms” were pushing investors to use their own investment funds by preventing “like fund” competition on their platforms – particularly with multi-manager options. Matt Heine, managing director of the non-institutionally aligned Netwealth platform, claimed bank-owned platforms were stifling competition. “The risk in the current environment is that platform fees and, more importantly, platform ownership is making it increasingly difficult for non-aligned managers to get exposure on menus, models and, in the most extreme cases, multi-manager offerings,” he said. “This issue is compounded when you look at other platform components
including risk, cash and term deposits, margin lending and broking services,” Heine said. Yellow Brick Road chief operating officer Bryn Nicholson said vertically integrated providers and large institutions were “effectively [directing] their advisers through their control of platforms to sell products that may not actually be the best product for the client”. Connie McKeage, chief executive of OneVue, a non-institutionally aligned platform, said she believed the rate of inhouse product being sold on institutionally owned platforms was a cause for concern. “How can you argue that your own products are 80 out of 100 per cent of the time the best product for the client? I find that very hard to get my mind around, mostly because I don’t think it’s feasible and everybody knows it’s not feasible.” The Australian Securities and Investments Commission (ASIC) has proposed changes to the regulation of platforms,
Bryn Nicholson including the requirement for platform operators to disclose how they select financial products for inclusion on investment menus or in model portfolios. Nicholson said such disclosure would be “a really useful thing, to be able to pick
Macquarie, CFS take platform honours By Mike Taylor
MACQUARIE Wrap has gone back-toback in being rated first in the annual Wealth Insights Platform Service Level Reporting Rankings, with Colonial FirstChoice again rated second. Colonial First State continued its run of success, being ranked first again in the Fund Manager Service Level report, followed by Vanguard. The announcement of the Platform Service Level rankings came almost at the same time as Colonial First State announced that the FirstChoice platform had achieved a milestone by reaching $50 billion in funds under advice (FUA) – fractionally ahead of its first anniversary later this month. Commenting on the outcome of this year’s rankings, Wealth Insights managing director Vanessa McMahon said Macquarie Wrap and FirstChoice appeared to have emerged as dominant forces in the platform space. However, she noted that that IOOF’s Pursuit platform, which had been ranked first in 2010, had continued to perform well. McMahon said there seemed to be little separating the Macquarie Wrap and CFS offerings, but CFS had managed to remain on top with
Platform Service Level Rank 1. Macquarie Wrap 2. CFS FirstChoice Fund Manager Service Level Rank 1. CFS FirstChoice 2. Vanguard
Justin Delaney respect to overall satisfaction. “We are looking at a sector where the relative performance of these products matters to those charged with running them,” McMahon said. “Boards and senior management are looking to external measures with
respect to peers, and the third party nature of this research means there are no biases in the data,” she said. CFS chief executive Brian Bissaker acknowledged the importance of continuous improvement with respect to the platform. He said the company was continuing to invest in the underlying infrastructure and also to examine new offerings, including whether new services might be developed to help underpin the changes inherent in the Future of Financial Advice (FOFA) legislation. However he said that in terms of FOFA, the FirstChoice wholesale offering had been FOFA-compliant for a number of years. Macquarie’s head of platforms Justin Delaney attributed the backto-back wins to the company’s focus on adviser requirements. “We’ve continued to direct our energies towards what the client wants and needs,” he said. However Delaney said this did not necessarily mean that Macquarie Wrap would be looking to add new elements to the platform. “Adviser satisfaction is what counts, and we’ve never really believed that is driven by bells and whistles,” he said. “Consistency of service is what matters.”
apart some of the effective tied distribution arrangements that are implemented through platforms”. Matrix Planning Solutions managing director Rick Di Cristoforo said it was “pretty obvious the only real criteria for inclusion on platform lists is commercial, so additional transparency would be good”. Macquarie head of life Justin Delaney said Macquarie was “happy to disclose the process behind the products that sit on Macquarie Wrap to those who ask”. “We support transparency and have an open criteria, with no default or preferred funds.” IOOF’s general manager of distribution Renato Mota said IOOF disclosed its process and was “generally supportive” of the initiative. AMP and Colonial told Money Management they don’t disclose their process for selecting funds. Continued on page 3
Social media becoming indispensable tool By Chris Kennedy NEW technologies and social media are becoming less of a fad and more of an essential business tool, offering opportunities in key business areas such as gaining referrals and providing scoped advice, according to Hugh Humphrey, managing director of AMP-aligned dealer group Hillross. He said the instantaneous nature of social media could also help advisers keep clients up to date with important developments such as legislative changes, and that social media was an area where a licensee could really help an adviser add value. Humphrey said social media services such as Twitter, Facebook and LinkedIn could also help advisers supplement face-to-face meetings with other forms of regular, meaningful contact. Some Hillross advisers, for example, post regular newsletters (providing updates on topics such as financial markets movements) via Twitter, which allowed clients to choose whether or not to engage with each communication. Hillross also rolled out nine iPad apps to its advisers at its national conference in January, which Humphrey said had seen a collective 720 downloads among the group’s advisers. Such apps could help advisers in providing scoped advice by dealing with each “piece of the pie” separately, Humphrey said. He said analysis from the US had shown that social media could be used to introduce advisers to prospective clients and help to build networks. “When an adviser can credibly Continued on page 3