Praemium set to take off under fee-for-service

New portfolio administration products from Praemium mean the company is well placed to take advantage of an impending shift towards fee-for-service remuneration in the UK, and plans to use the lessons learned there to expand its business here, according to group chief executive Arthur Naoumidis.

The products Praemium is currently running in the UK are called discretionary models in the local terminology and work similarly to a separately managed account (SMA), except the wrap is placed around the whole portfolio and investors place all of their assets into it.

The products are similar to model portfolios but do not require a new Statement of Advice (SoA) to be prepared each time the model is changed, making them more efficient, according to Naoumidis.

“What we’re finding is that because of the regulatory changes that have happened in the last six months [in the UK] all of the platforms are now trying to employ discretionary models,” Naoumidis said.

“I think we’re in the right place at the right time with the right product. There’s a huge land grab going on, there’s $300 billion that’s got to move to platforms in the next two years,” he said.

Praemium is also suited to the UK version of fiduciary duty that is being implemented, and at this stage there is still relatively little competition in the space, he added.

There are currently two such products live and taking money in the UK and Praemium plans on rolling out similar products in Australia known as strategy SMAs in the second half of this year in preparation for a shift away from commissions in 2012.