ColonialFirst State’s new flagship master trust, FirstChoice, has taken in an impressive $850 million since its launch just three months ago.
The first $300 million is money rolled into FirstChoice from other investment platforms operated by Colonial and its parent, the Commonwealth Bank, but the other $550 million is fresh money.
And a strong proportion of that has come from independent financial advisers with no links to Colonial or the Commonwealth, a fact Colonial First State general manager of distribution Michael Cant says is the most surprising aspect of FirstChoice’s growth.
Up to 40 per cent of flows into FirstChoice are coming through independent financial planners. The remainder is flowing equally through the Commonwealth’s bank-based salaried financial planners, and its two commission-based dealer groups, Financial Wisdom and Commonwealth Financial Solutions.
The strong growth comes despite an overall negative trend in the master trust sector, with the latest figures from Assirt showing that the market actually shrunk by 1.28 per cent in the June quarter.
The popularity of FirstChoice among independent advisers is being attributed in part to the relatively generous — 60 basis points — trail commission the product offers.
However, the commission structure has not been without its detractors. Last month, Sealcorp chief executive Ian Knox toldMoney ManagementFirstChoice’s commission structure was “an area of real concern for consumers”.
But Cant has brushed aside the criticism, arguing FirstChoice can afford to pay the commission not because it increases the fees levied on consumers, but because it is prepared to pay a greater proportion of its overall revenue to financial planners.
FirstChoice claims to pay one-third of its revenue back to advisers who support the platform.
“I think we have come in with a very competitive offer and we are forming a strong market position. We are now growing at about $200 million per month and we have significant scope to increase that,” Cant says.