Independent dealer group GPS Wealth has abandoned its former platform-heavy investment model in favour of managed discretionary accounts (MDAs).
In a bid to boost efficiency and reduce costs, the dealer group opted to move away from its predominantly manual processes, its managing director Grahame Evans told Money Management.
“We’re looking to utilise passive investment wherever we can,” he said.
“Platforms and managed funds are still very expensive and inflexible, and our philosophy is to add value through asset allocation and by keeping fees down and preventing clients from making silly, emotional investment decisions.
“We will still use platforms for some clients where our care process does not fit, but where we can we’re trying to move towards MDAs.”
As part of the structural shift, GPS Wealth signed a deal with MDA operator managedaccounts.com.au in May last year and has been implementing its advice in the last few months.
The new model has allowed GPS Wealth to reduce its investment management fee from 1.5 per cent of assets under advice to between 0.6 and 0.8 per cent, Evans said.
Evans said he would be “very surprised” if other dealer groups and larger institutions did not adopt a similar strategy, given the overheads associated with master trusts and wrap platforms.