Inflows neglect wrap and master trusts
Inflows into retail financial services products do not accurately reflect the current state of the market since they do not track funds entering master trusts and wraps, according toBT Funds Managementhead of retail Rob Coombe.
According to Coombe, the measure of funds inflows has been set up to consider managed funds but there has been a sizeable shift to master trust and wrap accounts which are not adequately covered in the reporting of inflows.
“There is a type of strangling of the retail market occurring which is the result of the shift to mezzanine and wholesale products which market share reports do not show,” Coombe says.
He also says the inflows figures do not reflect issues such as who is managing the incoming retail funds, who is administering those funds via platforms and who is distributing product and capturing clients.
“This is difficult due to the level of white label products in the market which are badged by numerous groups and are hard to measure. Given this, it would appear the banks are doing well and the data indicates they have over two thirds of the market but that is wrong when compared with the inflows generated by independent financial planners,” Coombe says.
“This has been confirmed in the last Cerrulli report on the local market which says banks have lost market share.”
Coombe says 25 per cent of industry inflows are not reported due to white label products being re-badged and BT would supply such data if it received permission from clients to do so.
“People do want to know who is managing the money as well as winning the administration and distribution battle,” Coombe says.
Coombe admits the reason for BTFM’s comments on this issue is because the group feels it is not being accurately represented in the funds inflow data, but says this will always occur until the shift from retail to mezzanine and wholesale is better reflected in the funds inflow data.
BTFM currently has $5.2 billion in funds under administration in its wrap product which is accessed by 29 financial services groups and 2000 financial planners.
AUTHOR
Jason Spits
Recommended for you
Several financial advisers have been shortlisted in the ninth annual Women in Finance Awards 2025, to be held on 14 November.
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
Australian investors are more confident than their APAC peers in reaching their financial goals and are targeting annual gains of more than 10 per cent, according to Fidelity International.
