Where do the costs go?

It is no secret that master trust funds and other forms of reporting technology require constant updating. And, it seems, they also have a never-ending string of payments.

So when a master trust provider does update or enhance its platform, who ends up paying for it?

According to AM Corporation Bureau manager Brendan Gallagher, many investors immediately assume they bare the costs in the platforms fee. However, Gallagher says, this isn’t always the case.

Gallagher says when the AM Bureau was rolled out in March 2001, it originally adopted a flat monthly fee for usage based on whether users were clients of AM’s LifeTrack service.

Under this initial introduction, clients were charged $8 per month for the full suite of services and non-clients would pay $100 per month.

However, shortly after AM Corporation decided to extend the fee-free status of the service to all clients of the group. The same was applied to financial planners using AM Corporation products.

“The cost of that work is absorbed by the company,” Gallagher says.

“When we first came out, going back 18 months, the long-term future of what we were offering was heading in the direction of being free anyway. AM has absorbed those costs, which means no additional charge has been added to our clients fee.

“We thought there shouldn’t be a fee charged. We’d like to differentiate our entire service product. There are still benefits for us [even without fees]. The benefit for the clients and advisers using the service, is that it is faster. We also see the additional services, such as tracking a number of different portfolios, shares cash management trusts, as a value-added service,” he says.

The bureau is distributed through its network of advisers, and provides the consolidated reporting features of a wrap account while at the same time providing detailed research on managed funds and shares as well as a method of transacting shares and managed funds.

—Kate Kachor