Clients want transparency: IRESS
A demand for transparency from clients is driving the move out of unitised trusts and into direct equities, according to IRESS business development executive Todd Yarrow.
There is increasing demand from planners for IRESS's trading, reporting and client portal services, Yarrow said.
"[Advisers] like the ability to interact directly with the broker without having to bang the trades in," he said.
The trend is not resulting in a "massive revenue boost" for IRESS, because it is coming from advisers who already use the company's software, he said.
"It's the same guys that are using our portfolio package, but instead of data-feeding and managed funds services they're utilising the direct equities features," Yarrow said.
Most advisers who offer direct equities to their clients do not have discretion to pick stocks, he said.
"There aren't many managed discretionary accounts. Not many people are able to get those," he added.
The biggest stumbling block for planners is to do with administration and volume, Yarrow said.
Typically, it is not worthwhile for a planning business to run direct equities unless they have a large amount of funds under advice and can afford to hire someone to do the administration - but IRESS's services can help smaller practices who want to run direct equities, Yarrow said.
"[A planner who is just starting out would] probably be better off to go into managed funds from a business point of view, but it's not always what the client wants. And these days you've got to give them what they want," he said.
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