Managed accounts meets post-FOFA needs
The volume of regulation in the financial advice industry may have made it a safer one but the complexity surrounding the changes may have outpaced any real advantage from this change, according to Colonial First State.
Head of retail sales, Laird Abernethy said the changes in regulation were causing confusion for clients and paralysis for financial planning businesses.
“Today’s conversations are charred with frustration: frustration around being able to offer a cost-competitive and scalable advice offering in today’s world,” Abernethy said.
“You all have more options and choices than you ever have previously but are you really delivering better client outcomes than you did before?”
Speaking at an adviser briefing earlier this week, Abernethy pointed to the growth of managed accounts over the last six months, and said the technology was keeping pace with a shifting landscape in the advice industry in a post-Future of Financial Advice (FOFA) world, and offering advisers and licensees a client-centric and scalable advice solution.
While managed trusts appeared in the 1990s as a one stop shop of managed funds for advisers, and FirstWrap appeared beyond 2000, they did meet the requirements of the post-FOFA world, including the compliance burden, regulatory uncertainty, and the development of scalable, efficient back office.
According to the 2016 Investment Trends Planner Direct Equities and Managed Accounts Report, managed accounts accounted for around $40 billion of funds under advice in the industry, which amounted to a 27 per cent growth over the last six months to December 2016, or almost $9 billion.
“For a medium sized advice practice, our research shows that the implementation costs of changing an underperforming fund can be as high as tens of thousands of dollars and takes six months to complete,” Abernethy said.
“Because of the managed account, this can solve instantaneously across your client base. It largely negates that cost and it can reduce six months down to six minutes.”
CFS' platform offerings and future plans will be discussed and debated in-depth at Money Management's Fintech Platforms & Wraps Conference, due to be held Wednesday 2 to Friday 4 August at the Gold Coast.
AUTHOR
Malavika Santhebennur
Recommended for you
The FAAA has secured CSLR-related documents under the FOI process, after an extended four-month wait, which show little analysis was done on how the scheme’s cost would affect financial advisers.
Nearly seven in 10 HNW-focused advisers view alternatives as the asset class that will be fundamental to meeting client demands in the future, according to Praemium.
The Perth-based advice practice has welcomed a private wealth adviser and senior paraplanner to its ranks amid its strategic shift towards wealth transfer strategies.
The number of members expelled from the Australian Financial Complaints Authority almost doubled between 2023 and 2024, according to internal data.
