Platforms fail financial planning clients
Administrationplatforms such as master trusts and wraps do not provide benefits to clients and, in some cases, hide the inefficiencies of the financial planning industry, a major new report has claimed.
Further, while such platforms may have increased the efficiencies within a financial adviser’s business and reduced their costs, these savings have not yet flowed onto consumers who are still paying roughly the same level of fees that were being charged a decade ago.
The claims are part of a wide ranging industry report, titledHypercompetition Part Two, which considers the major issues facing financial planners.
The report, written by Credit Suisse Asset Management senior executives Brian Thomas and Clayton Coplestone, follows on from a similar paper released late last year.
The authors, who hold the roles of head of retail funds and head of retail sales respectively, maintain the planning industry has become fixated on administration platforms, which ignore the needs of clients.
The paper has also weighed into the debate over fees and commissions and says while the debate will continue, the focus is now on whether planners actually add value for the remuneration they receive.
However, as pressure is placed on fees, planners will be forced to find new ways to work, including collaborative approaches through alliances and multi-disciplinary practices.
But the paper states that planners are reluctant to make use of such methods because of overriding self-interests.
The paper says consumers will also start to apply new benchmarks and will reject current models of measuring financial products and advisers.
“As performance reverts to the mean, consumers will increase their comparison of investment against the ultimate index — the ‘after fee and tax absolute return index’.”
Full report on page 10.
AUTHOR
Jason Spits
Recommended for you
ASIC has permanently banned a former Perth adviser after he made “materially misleading” statements to induce investors.
The Financial Services and Credit Panel has made a written order to a relevant provider after it gave advice regarding non-concessional contributions.
With wealth management M&A appetite only growing stronger, Business Health has outlined the major considerations for buyers and sellers to prevent unintended misalignment between the parties.
Industry body SIAA has said the falling number of financial advisers in Australia is a key issue impacting the attractiveness and investor participation of both public and private markets.
