SMAs leading platform innovation

Platform innovation is currently being spurred by the increasing popularity of separately managed accounts (SMAs), according to Brandt Page, director of independent fund distribution and advisory business Fortuna Partners.

He said platforms have struggled to service high-net-worth investors with the array of different assets available.

Head of Macquarie Adviser Services Tony Graham said the attractiveness of SMAs lies in their model portfolio capabilities.

Graham said Macquarie is looking to create model portfolio capabilities within a wrap and will be there within the next year, because this is sure to be a platform differentiator.

AXA’s general manager of platforms Steve Burgess said SMAs are not necessarily a competitor to wraps.

"They can complement a wrap offer and we’ve seen certain players taking a leap in that area," he said, referring to Aviva. "Certainly our view is that SMAs should be incorporated into an overarching wrap offer, to complement the offer."

Burgess said platform providers are reacting to investor demand for more control and flexibility, and the fact that more advisers are recommending SMAs.

Praemium managing director Arthur Naoumidis said the industry move to fee-for-service is changing the financial services landscape, including platforms. He said planners have had to put their clients into products that paid commissions, but once they move to fee-for-service they can put their clients’ money anywhere, including direct equities.

Cameron Dickman, retail general manager at Australian Unity, agreed that platform developers are looking towards equities and how platforms transact with other assets.

"From our investment point of view, we are dealing with a range of SMAs because we definitely believe they will evolve and take a very significant place in the market over time," he said.

Paragem managing director Ian Knox said there has been little or no platform-led innovation over the last few years. Rather, providers are reacting when they experience a market squeeze. Knox said the current economic climate has put the spotlight on cost-structures and value propositions.