Managed Accounts – where to from here?

The rise and rise of managed accounts over the past five years has been owed to a range of factors including the impact of the Future of Financial Advice on planner revenue and increasing competition the platforms space. Money Management conducted a roundtable in which key participants discussed the evolving dynamic.

But what became most evident was that increasing use of managed accounts was owed to a mutuality of interest on the part of planners and platform providers and the reality that the resultant relationships were proving to be deep and lasting.

Present:                Mike Taylor (chairman) – Managing Editor, Money Management

                                Peter Chun – Colonial First State

                                Toby Potter – Chief Executive, IMAP

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                                Andrew Jones – Financial Wisdom

                                Brett Baker – Evergreen Consultants

                                Gary Loffagen – Centric Wealth

                                Justin McLaughlin – Clearview (matrixplan)

What makes managed accounts on platforms attractive?

Colonial First State has brought a number of enhancements to the managed accounts offering on its FirstWrap platform, including no brokerage fee, but does that represent a really compelling differentiator?

MT: First thing is obviously Colonial First State are sponsoring this, and so we’re going to talk a lot about what they’re doing as well as in the general context of things, and my opening question is it’s great to see CFS have come to market with its no brokerage fee account on FirstWrap. But to the table in general, and I suppose Peter in particular, how much of a game-changer is that in the context of what makes managed account providers and platforms particularly attractive? So, I thought Justin, we’d kick off with you with the ClearView Matrix perspective.  

JM: It’s actually not very important for us, and the reason is for us managed accounts are effectively not the asset. Plus, managed accounts are largely done through funds through which we can use direct shares.
For us, a managed account solution is really mapped to the portfolio that the client actually uses, and in most cases that’s a multi-asset plus portfolio. So, you’re at an interesting juncture where most managed accounts are obviously direct equities, but we’re moving in that direction.

It’s a good thing in terms of one of the things you really need to avoid in a direct equities managed account is just too much burden in terms of transaction costs. That’s just one of the key things, if you have frequent rebalancing, and the industry has to move to that and it’s good to see that one has done that. 

MT: Andrew?

AJ: I guess I see things from my point of view, from a planner’s point of view, where I see the CFS solution being attractive, I guess no brokerage is good but I guess you’ve got to look at the total running cost to come.
But where I see it being really useful is the old stockbroking straight equities portfolio [which is] really almost a thing of the past, and a managed account or a separately managed account in this instance really taking that over and providing the professional oversight in management of a portfolio.  So, whether that’s in a broader managed account with different asset classes or sitting on its own as a complementary, I see that being a step in the right direction. 

MT: Gary?

GL: We don't use brokerage I don't think, in fact I know we don't so no impact, but that obviously puts pressure on [the] brokers we do use. We think we’ve got quite a good rate but it’s not free, so that will just push the fee structures in a more competitive space and our guys – when did you do this or when was it announced? 

PC: End of March. 

GL: Yeah. Ours is I think 0.2 per cent - what is it, 0.2 of one per cent no minimum brokerage? So, it’s a relatively modest amount and we don't have high turnover of direct shares so there is obviously the cost. So yeah, watch this space, our guys may have to look at that one ourselves.  

MT: Brett?

BB: For us I guess when we go about working with our clients to create a managed account solution it’s on a client-by-client basis. So some clients will come to us with a preferred platform already in mind, but at least half of them will come to us and say, “Can you run this tender process for us?” and then what they will do is cut their book up and we’ll put it in front of a number of platforms depending on legal structure, product structure that they want et cetera, and then it comes down to basically what is best for their underlying client base from a cost perspective plus functionality.  

I think when CFS go live with their managed account offering it will obviously be a big part of their consideration. I might say [that] half of our clients just do straight managed funds as Justin was saying as a multi, but we are finding more and more want either their Aussie or even potentially their international piece either run as part of that managed account or potentially left outside it and running it through a different – like an MDA structure or what have you. So, it’ll be important, no doubt. 

MT: And Toby from you more of an overarching view I guess.

TP: I see it as symptomatic of the impact of managed accounts generally in driving down all the components of the service delivery.

So, you go okay, this time we’ve managed to get to a zero brokerage, in other aspects we’ve put the squeeze on investment managers for their costs, the costs of the administration itself has fallen. So what we’re seeing is, I think, managed accounts being used as the vehicle by which these economies are transferred back to the client, partly because they are genuine economies that are achieved by moving to structured processing and partly because that’s the cycle of the advice process where we need to be able to meet those best interest tests, need to prove that the things we’re doing are actually achieving the benefits that we said they were going to achieve, and the political climate lends itself to demonstrating a very overt way where those benefits are being shared.  

MT: So, Peter what was the thinking as you brought that up, because it is something you highlight? 

PC: You’ve used the word ‘game-changer’, managed accounts overall is a game-changer and I think everyone here believes and agrees with that. I think from our standpoint we were just looking to try and drive innovation, try and deliver the best outcome for clients, and part of being able to do this is because of the different parts in the Commonwealth Bank Group because we have CommSec and that helps us.

When you join it all up you can be quite innovative and do something different.  In an environment where advisers are needing to meet best interests, needing to remove friction, get rid of these niggle factors, it’s one component. We don't see it as a massive thing but it’s helpful.  If there’s zero transactional costs and clients don't see these little bits everywhere I think that’s helpful for the advice industry.  So that’s what drove our thinking.  

MT: You referenced the managed accounts generally as being a game-changer and we agree with that. I think Toby and I have talked about this for a long time and there were a lot of years when everybody’s saying, “Managed accounts is the coming thing” and then they didn't really come.

TP: Yeah, tell me about it. 

MT: But if we look at the market now and we look at the Investment Trends research and the most recent one, you look at the relative growth of Net Wealth and Hub24, they’ve carved out a fair slice of the market.

So, what I’m wondering is in the context of the large and established platform players like CFS, did you have to get more innovative in what you delivered to advisers and dealer groups, or was it a case of just doing what you always do which is invest big time and get to where you need to get to? So, starting with you on that one Pete. 

PC: Well we’ve had, and certainly Toby, Gary’s business, we’ve been supporting managed account structures for many years and we run about $7 billion which I think would be one of the largest in the market. So, we’ve got the heritage in this space and it’s all about trying to continuously innovate, trying to move with the newer technologies and that’s where we’re at with this.

We’ve done a piece of work with IRESS to leverage their implementation technology to try and access that, because in the past we used to have that in-house. It’s us continually looking to partner with what we believe are best in breed in the different parts of this, and ultimately it is supporting the advice business.  

This has been the trend that has really, I think, accelerated post FOFA. I think FOFA has driven a lot of the need to focus on efficiency, focus on client engagement, focus on better controls, standardising portfolio outcomes so clients get a more consistent outcome being delivered to them.  So, we’re just seeing that and are evolving as the market evolves. 

MT: Okay, well Andrew you’re at the coalface. I think all the platforms in one way or another are trying to basically survey advisers and what they want and what they need. To what degree do you think that what CFS has done and the others have done as well, to what degree do you think they’ve covered all the needs at this point? 

AJ: Yeah that’s a good question and the short answer is I think it’s still a work in progress. You don't really know a platform until you get your hands dirty, and you can’t get to know every platform.

I’m still relatively new to the SMA space, individually managed account space, so I’m still learning different managed account platforms and their functionality, and so as I said not till you use it do you really understand what functionality you’re getting there. So, I think it’s a good start. I guess there’s a lot of trade-offs. Some managed account platforms will provide, for example, the ability to stream income out, if that’s how you’re putting together say a retiring portfolio and you’ve got a larger client and you just want to show your income off, some will allow us to do that. Others no, you’ve got to reinvest that income.  

There are platforms that run their functionality and you really need to understand the type of client, the segment in your practice, whether or not actually they’re a good fit for that particular platform just because they say, “We’ll do managed accounts.” It’s not till actually you open the curtains up and look under the bonnet do you see whether or not that’s actually going to be suitable for that particular party or client base.

No doubt the early adopters have got numbers on board, and I guess we’ll be looking to the larger institutions because, to be frank, it’s very time consuming to pick up and move a lot of your business for an incumbent platform. You might have the best intention to do that, but that’s a big drag on productivity and you need to be very careful that you make the right decision.  

The larger institutions? I think their relevance will be how they continue to modify their speed to change and probably playing a little bit of catch up, and then what’s going to be their point of difference. So, brokerage might be one thing but there might be some other things as well. So, it’s quite a moving feast at the moment. 

JM: I think one of the really big challenges on knowing which of the technologies should go is in a sense if you go down the managed account route you both change the financial planner’s business model and you change the advice process and that’s the fundamental change, and then the question is how does technology support those two fundamental changes?

I think the answer is we’re not 100 per cent sure yet. I think managed accounts had the genesis in direct equities for obvious reasons and that’s been their birthplace, but in the really long run they’re probably going to be the whole portfolio solution and where’s the priorities There’s been a lot of money spent in Sydney on platforms and has it been wisely spent?  

MT: Gary, what’s your view on it? 

GL: Well my general background, I’ve been using an MDA service for 17 years now, so I know no other way really, and I don't know what else is out there in the market. We don't chop and change. Andrew made a valid point; it’s a big ask to shop around all the time, you’re not going to do it unless you’re really unhappy with what you’ve got, or you see or hear of something that’s significantly different.

So, to get back to your original point, get the basics right. You’ve got to have some basic functionality that is streamlined to a point, that ticks all the main boxes, then it’s a matter of the enhancements progressively over years. It’s an evolving system that we’ve got with Colonial, we want a bit of this or can you do that better or what about that reporting? So, I don't know what else is out there, it’s more what we’ve got, can it be tweaked once the basics are taken care of? 

TP: Justin’s point about the fundamental business change is absolutely the right one, they were moving from what was essentially cottage industries of a few advisers in an office with some support staff being administrators first and advisers second to a position where those people sitting in that office, the advisers, they can concentrate on their main job which is advising in the confidence that, as typically happens, the licensee has an arrangement which will actually result in those portfolios being implemented in the way everybody expects.  

BB: I’m not sure who touched on it but to move business from one platform to another is a massive issue, and one you want to try and avoid. 

Even though we’re all about getting the best solution for the end client, if it ain’t broke don’t fix it. So, if somebody is using platform A and platform A has a managed account solution and that will work with the type of portfolios and the legal structure you want that the end client needs then let’s start there. The managed account process is going to disrupt your business anyway while you bed it down over the next 12 months. The less change that you can take on while you’re doing that, the better it’s going to be for everybody. 

TP: It’s a big change for clients as well so if you then change again - 

BB: It’s a massive change for clients, absolutely. Coming back to the original question with the larger businesses, the larger institutions being a little bit behind the eight ball, there’s no doubt about that.  Everybody is coming to the party in some capacity now. Whether that’s 12 months away or 18 months away or what have you, the reality is if they don't there will be massive outflows, and not just outflows from the platform but with these vertically integrated businesses that have their platform and their adviser groups sitting all underneath them. If they cannot provide that they won’t only just lose money over the platform, they’re going to lose adviser businesses as well, and we’re seeing that already across a couple of them.

MT: Pete, I’ve got no idea what the IRESS development has cost but a big number I would think, it’s been a non-trivial thing for Colonial to do. Colonial’s got plenty of resources and my observation from outside is it has actually been a bit larger than was originally anticipated and I would think considerably more expensive than was anticipated.  

PC: Yeah, I think when you compare platform providers in the market I think there is a clear difference around the larger institutions. [They] have the capital backing, have the capacity to fix problems, focus on cyber security, focus on all the protection, all the risks. That invariably is what’s important to a large institution and ultimately to the end client because we’re dealing with retirees.

These are people who are there for the long term and one of the things that I think as a large institution, the benefit we offer is that security. Now often that does come at a higher cost in terms of what we spend because we need to ensure the rigour, the robustness, and I would say that maybe some of the smaller players don't necessarily focus on some of those risks. But it’s invariably what I think again – to Andrew’s point about points of difference it is an important thing.  

Security is a big theme at the moment - cyber security, digital fraud. Managed accounting is one part of an adviser’s business, but importantly, when you partner with a platform you’ve got to think of the whole dynamics. It’s not just have they got the best functionality here, it becomes the business model and then I think that’s the word people are using. That’s the ultimate decision point, who are you partnering with for your over-arching business model?

Is the rise of managed accounts owed to FoFA

In a post-Future of Financial Advice world where advisers are finding their revenue sources restricted by remuneration rules, it is easy to see why managed accounts have become a popular option.

MT: One of the things, and Toby actually prompted me to think about this fairly hard from some of the things he said last year at our Platforms and Wraps Conference, is that the whole managed accounts thing got its most recent impetus from the FOFA changes and the requirement to change commercial models, whether you’re a small planning practice or a bigger group. So, looking at the planner interface to begin with – to what degree were you attracted to managed accounts because of that change?

AJ: Well for a business like us it wasn't so much [the] FOFA changes, actually it was more – well it was still of interest, our change and what we’re trying to do, but it was more around efficiency.

We don't have an MDA authority, and through organic growth and acquisitions we ended up with seven/eight different platforms. So, it’s purely self-interest and trying to streamline our business that is leading to managed accounts. So, for us not so much FOFA saying one thing or leading to a response, it was more there’s got to be a simpler, easier way, and getting bigger is okay if you’ve got growth ambitions but you’ve got to get smarter and more efficient. So, we’re still working through that efficiency dividend.  

TP: It’s interesting, some of the work which IMAP’s done with business health and Colonial just over the last few months by surveying the metrics of advised practices show that efficiency dividend takes a few years to kick in. In fact, you start from where you are as Brett said, but it’s only over a few years that you get the growth without the overhead increase or that the clients end up being in better structured portfolios.  

GL: It’s kind of different for us because obviously the business evolved because of managed accounts, Andrew and I put this together because of that. But let me look at it from a different way.  When we asked advisers, “Why are you doing this?” I would say 70 per cent of our client base had said, “It is all about giving a better, more timely, more effective level of advice to the client.”

Now they’re the meetings you love, you walk in, you have those meetings, great, you walk away and say, “I can work with these guys.” There have been a number of advisers where you walk in, you sit down and talk to them and they’ve gone, “We want to bring this down, bring that down, get this rebate in, bring the platform costs down and we want to clip the ticket” and they’re the ones you walk out of – 

TP: Thinking I’m only doing this for the money. 

GL: Correct. But there are some groups out there that are really pushing, “Okay we’re not getting the rebates from the platform anymore, where are we going to do it, how can we turn this into a revenue item?” Don't get me wrong, we think advisers, if they are absolutely increasing the level of service they are providing to their clients they should be able to charge for it, but it has to be within reason. If you like not getting rid of but changing the way that back office works is generally not the number one thing that we come across that pushes advisers into this space, it is about getting a better level of advice to clients. So, they’re not getting a review in January with the same investment strategy happening in June as well, it’s all happening one push of the button, one separate item. It’s just better, it has to be better for the client. 

TP: In a past life I, for my sins, ended up reviewing a lot of financial planners’ older books and I can tell you they’re not rebalanced as they should be. Planners are not traders and they shouldn’t be doing that often. It’s strategy not tactics obviously. But everyone’s got a big bank book, everyone, and sometimes these clients are really hard to contact.  

JM: You do an ROA on this and you might get half the ROAs back, you might get half back within six months and the other 20-30 per cent never comes back then all of a sudden, you’re running 10-15 different portfolios, and no one really knows where they’re at, it’s a nightmare.  

BB: And it’s particularly prevalent when you have a lot of direct equities in there as well because – 

GL: Corporate actions – 

JM: Corporate actions, they get out of whack really fast. Managed funds are a little bit more robust typically, but the direct equity side, and you can see a portfolio that’s been neglected for a few years, and it’s well and truly out of whack and increasingly planners are going to be under pressure – they’re under pressure now not to charge fees for no service, but increasing the review can’t just be – well obviously – but it can’t just be, “I contacted you and here’s an offer of doing an ROA”, it’s going to have to be a little bit more than that and you’re going to have to be able to demonstrate that at least on an annual basis your portfolio is probably your balance to its target.

That seems a reasonably de minimis requirement, but a lot of them are not, and not from a lack of good will on the planner’s side, it’s just very hard sometimes, it’s very hard. 

PC: I’d agree with a lot of those comments. I think everyone knows that there’s lots of benefits of managed accounts. I’d say the thing in this case is in all areas so there are fantastic benefits for the client, there’s fantastic benefit for the advisers or the advisers’ practice, and then the licensee. So, when you have the confluence of the alignment across all the different parts of our value chain then you get the take-up. But the common theme we hear is the not needing to do the ROA and that’s a big time saving and often I don't think our end clients really value the administrative burden of shooting the ROA. So, it’s a very good outcome that we’ve removed something that doesn't really add value in our industry. I think that is the core benefit that no one can really dispute.  

TP: And I think there’s also a subtle related benefit to that which is that from the adviser’s point of view every time you give a piece of advice you essentially are on risk – you personally gave that advice. Once you are able to say, “The actual portfolio management, the investment decision making has been delegated to an investment committee and those people know what they are doing, I’m actually off risk apart from anything else. Portfolios are being managed and it may not go right 100 per cent of the time, but actually I’m not on risk”. 

GL: And it strengthens the client relationship too because in good times you certainly don't take the credit, and in bad times you don't take the heat as much, you go, “Yeah they made a bad decision, or they didn't pick up on that one as early as they should’ve”. But it’s exactly right, it removes that investment part from the advice part, and to me again that’s the way I’ve done it for the last 17 years. Great, celebrate the good investment decisions but don't take credit for them, and you don't take the heat when it goes the other way. 

TP: One of the things which really interests me, the extent to which clients who go through this experience because I don't have retail clients, so I don't know, how do you think they resolve in their own minds that nexus between what my adviser does and what those people he works with do? 

GL: I think they say, “Okay, Gary works for this company, he’s explained that there’s an investment team there that do a higher level of investment analysis than he’s qualified to do and they come up with the best mix of investments” and they just accept that that’s part of the financial advice piece, but it’s only a part of it. So, they then can say, “Okay Gary’s happy with them, if he’s happy with them I’m happy with them. What am I going to do, second guess them?” And we just concentrate on the strategy. I just think that works really well. I rarely go into any depth on the underlying investments because it’s a given. 

JM: And yet the culture problems are not client to managed account cultural problems, they’re IFA to managed account cultural problems because that’s the big step you have to take as well. Clients I think are pretty comfortable with it, they actually like the fact that it’s a bigger institution servicing them because it’s a suburban office in most cases so that’s a good thing. But it’s defining the IFA role in relation to managed accounts and the advice proposition, that’s still an interesting evolution for us all I think.

Will tax and regulatory uncertainty change the managed accounts equation?

With a Federal Election looming within the next 14 months and with the major parties already haggling over the tax treatment of dividends, questions are being asked about the ultimate impact, but regulatory scrutiny is also a factor. For financial advisers, the attitude of the Australian Securities and Investments Commission is as much a factor as the tax settings.

MT: Next question, and I hate to use the term black swan, but we’ve had the federal opposition talking about tax changes and at least a part of the attraction of managed accounts is the tax settings and how the investments are treated. Do you think there’s any black swan risk in respect to how future governments might treat those settings? Is there a risk factor there do we think, or do we think given how the market has gone, given that it’s not really a problem area they’ll just leave it alone totally?

TP: Well I don't see the risk quite in the way you’ve couched it but in my dealings with ASIC I do see them asking themselves the question as licensees getting into the managed account business, “Is this simply a revenue grab?” and in fact I’ve had asset people use that phrase, revenue grab. So, you try and explain to them that actually it’s a much better connection between revenue and service, people who are doing things are getting paid for the thing they’re doing. But I’m not sure that ASIC is convinced in that way. I’d be more concerned about that as an issue, particularly in the current climate where they see themselves being the white hated sheriff riding in to clean up Dodge City. 

AJ: And that’s not the next day, the next week or the next month after all the damage is done. So, that’s the problem I see with the regulator normally. It’s like they come in with their hose to put the fire out but the town’s already burnt down.  

MT: They create the flood with the hose, yeah. 

AJ: Yeah.  

JM: The interesting thing there though is what ASIC ultimately would do is going to ask questions about all these thousands of potentially what’s mini investment committees that pop up everywhere, and then you’re going to say, “What is the process, what is the objective, what’s the skills?” If you think about it actually financial planners have that authority right now –

AJ: That’s exactly right. 

JM: But it might actually pop them onto the question, “Yes you have that authority right now, should you? Or is this an area that you are fundamentally responsible for as a fiduciary and at the strategy level, but you don't actually have time to research X managed funds or X shares. It’s going to be an interesting challenge there because it’ll actually go from the top to the bottom rather than from the bottom to the top in terms of perhaps how this thing evolves. 

TP: The counter-factual which is an adviser sitting in the suburban office, that’s the alternative part, much worse outcome and hopefully in some of the dealings we have with them and organisations like Colonial and whatever, we’ll lead them to the view that actually you end up with a much better structured set of responsibilities, then in aggregate people are by and large better off. The other point I’d make is that if you compare the 60 billion in managed accounts to the managed fund unit trust market, there haven't been the property trusts, there haven't been the frozen cash funds – 

AJ: But they’re not a product per se are they, they’re a service so they’re going to have that problem.  

BB: Well if ASIC had a good look at what some of the leading platforms are doing when it comes to their DD process to get these managed accounts up, it is extensive. There is no way that an advisory group sitting out in suburban Australia with a couple of advisers who’s been doing it for five to 10 years, it doesn't matter, could actually go confidently through a DD process with a platform and satisfy that. So, it is lifting that level up somewhat. Potentially, ASIC could come out with a document similar to an FSC document or something along those lines that actually does specifically address the issues around managed accounts.  

JM: I suspect ASIC will quite like it because it gives you much more certainty, more control, more transparency and it allows for hopefully better client outcomes. The risk factor is to some degree you’ve now got a bigger capacity for one to influence many very fast, whereas previously you had to do damage one by one by one – 

[Laughter]

How the industry is evolving around managed accounts

Planners and dealer groups have recognised the advantages of managed accounts, but the industry is still evolving around what can be delivered and by whom.

MT: Peter, from your point of view, and given there has been exponential growth in managed accounts, how has that reflected in the nature of business and flows because the platforms when we were all talking about this five to 10 years ago it was very much managed funds, we all knew where they were and our work, how’s that changed? Is it reflected in how the flows are operating? 

PC: It actually translates into how we think of operational risks because if something goes wrong and the platform’s ultimately implementing a lot of the trades, doing the rebalancing, it becomes systemic because rather than at the moment you’ve got it much more advisers could be doing it one-on-one or it’s much more scattered.

So, it means you’ve got to be very confident on our processes and our implementation rules and leveraging the best technology. So that’s one aspect. Coming back to your question about some concept of black swan or what can go wrong, I think Brett’s comment about some of the conflicts – in this industry I do think often very good things get undone because the minority just are conflicted, and hence that different platforms have different hurdles and what we would and wouldn't support. 

At the end of the day I think more and more we’re all focused on if we can improve customer outcomes, then that’s the best way to manage conflicts because we’re all genuinely believing that at the end the customer is better off. But at the end of the day I think there are groups that take revenue, and as long as those conflicts are very well managed there’s nothing wrong with having conflicts because that’s the nature of the industry, it’s how are they managed. If they can be observed, if they can be demonstrated, evidenced, then it’s all fine, it’s fine that a revenue is created in certain scenarios for an investment capability, there’s nothing wrong with that, that’s the value that’s been added.

But what I worry about is some parts of our system where the smaller operators do create very conflictive structures and then it gets to ASIC’s radar and then some form of legislation, and invariably again if they do act. But that’s what I think would be the potential black swan.  

JM: Yeah, because one of the things managed accounts do offer now is actually at the dealership level, it’s not the planner level, it’s not the managed account, it’s the dealerships, it’s the intermediary, and that’s because we starve dealerships of funds or we put on big compliance burdens.

It’s a bad model right now and we haven't solved that, but one thing it does do is it allows dealerships ultimately to move up the vertical chain, and if they’re using mainstream products or shares, probably as long as they’re sensible, not a big drama. When they start originating their own funds, and I’m not saying you can’t put your own shell around your own fund, there can be a reason for that, but when you start doing your own funds and then you’ve got the capacity, instantly see them with $20 million, $30 million, $50 million, you’ve got a big managed account capability up there right? And that’s where it gets a little bit interesting because that’s the next level up and that’s possibly where there could be some problems.  

TP: We’re just at the start, sort of on the S curve that all products go through, we’re starting to get up the steep part of the S curve and so we’re inevitably going to see some of the functionality which exists in unit trusts and which is developed over 30 years in unit trusts of hedging and derivatives and currency and overlays and that sort of stuff, we’re going to see that translate out to the managed account world. We’re going to see people like Parametric or Milliman come along to dealer groups and go, “Hey you’ve got $500 million, how about we give you a risk management overlay?” and then the pressure’s going to come on the administrators to support that sort of stuff. So, we are going to see the complexity rise ahead of the understanding [and] I suspect that would be my concern in fact in all of this as much as the conflicts.