Fund processing providers questioned

ColonialFirst State has questioned the need for a straight through processing service for managed funds, claiming such an offering at this stage would be a case of too little, too late, and would loose ground to existing master trust and wrap platforms.

Colonial’s comments come in the wake of last month’s deal between the Australian Stock Exchange (ASX) and IWL to offer a straight through processing service for the unlisted managed fund and superannuation industries, as well as InvestmentLink’s launch of its retail managed fund processing service, the e-Portfolio Transaction Service.

Colonial First State general manager strategy planning and development Nicolette Rubinsztein says as the market continues to swell with master trust and wrap providers, it seems almost a redundant option to start offering retail funds management processing hubs.

In fact, offering a retail hub now would cause varying levels of duress to both financial advisers and fund managers, of which many are currently tied to existing master trust platforms, Rubinsztein says.

“Lots of advisers are now only just using master trusts. So why would an adviser who is using Asgard, for example, want to stop using it? People are using master trusts and wraps, and it’s difficult to reverse that behaviour,” she says.

Rubinsztein also says there is a question mark over whether the Australian funds management market can support more than one straight through processing service, particularly as competition heats up between ASX and IWL, InvestmentLink and other groups such as Ausmaq.

“The Australian funds management industry is not large enough to support more than one hub,” she says.