The Commonwealth Bank of Australia (CBA) is the only one of the big four platform providers to finish last year as a Super Star of the sector, according to research by Money Management.
It is the second largest platform provider in terms of funds under management (FUM), but CBA has also continued to maintain healthy growth rates, helping to achieve the tag of Super Star according to the research (see table p20).
This is unusual in the sense that once an organisation reaches critical mass, it can be difficult to keep up with the average sector growth rate.
After all, increasing an already enormous client base is no easy task, whereas smaller players can make a bigger impact when starting from nothing.
The research confirms this state of affairs, with none of CBA’s big four peers appearing in our list of Super Stars.
National Australia Bank/MLC, ING/ANZ and AMP, despite having significant FUM, have fallen into the category of Fading Star, due to their inability to grow assets at the same rate as their competitors.
Other groups rated as Super Stars — meaning they had above average funds under management and above average funds under management growth – were BT’s badged wrap service, Macquarie, Perpetual and St George.
According to John Pearce, chief executive officer of CBA subsidiary Colonial First State, growth during 2004 largely came from the major relaunch of the FirstChoice platform. Its products now feature in the top 20 in terms of FUM, growth and cashflow.
“I would describe FirstChoice as a work in progress. We are always going to be evolving,” he says.
“The platform has got to that point where it is eminently scaleable, because we are leveraging off the same administration platform that all our funds sit on. And that gives us huge economies.”
Like many platform providers, CBA is also a big player in the administration market, through its wholesale product Avanteos.
“If you look at the history of Colonial First State, since the late 1990s and early 2000 we have embarked upon a strategy of diversification. So we diversified across our asset classes, but also from pure asset management to administration,” Pearce says.
With badged Avanteos wraps appearing as a Rising Star in our tables, it is clear that it is a popular choice for managers looking for an administration vehicle.
And Pearce doesn’t rule out the opportunity to white label the First Choice platform in future.
“We haven’t let anyone do it, but you never say never in this market. But because the organic growth has been so spectacular, and obviously the margins are more attractive without the white labelling, there’s no reason for us to change that strategy just yet,” he says.
So can CBA maintain its leading position in the future?
Pearce seems to think so, hinting at a major product launch in May this year.
Colonial First State has also recently renewed its exclusive distribution arrangement with boutique fund manager 452 Capital, with Pearce saying: “The success of the boutiques has directly fed into the popularity of our platform.”
— Larissa Tuohy
