Online services poised to make waves

The steady rise of online financial services may not kill the wrap account or master trust service, but it is sure to make huge waves over the coming months. Stuart En-gel takes a look at a service that will take the game up to the big boys — the In-vestmentLink

The steady rise of online financial services may not kill the wrap account or master trust service, but it is sure to make huge waves over the coming months. Stuart En-gel takes a look at a service that will take the game up to the big boys — the In-vestmentLink.

Peter Philip has hit the ground running since taking on the top post at Investmen-tLink about six weeks ago. Philip took on the job following the departure of his predecessor Gautum Tendulkar who left the group to set up another venture called Investor Cities. He had previously been heading up SuperChoice, another subsidi-ary of InvestmentLink parent group CPS Systems.

Since moving into InvestmentLink, hre has not only had to get his hhead around all the nuances of the system and the business but also present to an indyutry confer-ence and preside over the merger of the InvestmentLink and SuperChoice business at InvestmentLink.

He is also putting the final touches to a transaction service which he reckons could make some waves come July this year when it is launched. The service will be based on its database of funds management products and will provide an invest-ment wrap around service with a difference. This service will be accessible to cli-ents with less than $100,000 to invest, thought by most in the industry to be the minimum for a wrap account or master trust to make economic sense.

While Philip says the new service is not the nail in the coffin of wrap accounts, he does believe wraps will become less relevant in the next few years.

“I am uncomfortable with saying new services being developed at the moment will be the deathknell of wrap accounts,” he says.

“But what I will say is these sorts of systems are not one size fits all. Wrap ac-counts are excellent vehicles for investors with a lot of money to invest and com-plex tax situation. But there are also a huge number of investors who would like the benefits of consolidated reporting but don’t have the huge sums to invest nor the complex tax arrangements to justify the substantial fees.”

Electronic transaction and consolidation services such as that being developed by InvestmentLink will wrap around retail funds, unlike master trusts and wrap ac-counts which use wholesale funds and the accompanying reduced management fees.

Philip says this will fuel a huge resurgence in retail funds. Traditional retail prod-ucts have taken a battering in the past few years as more and more financial plan-ners turn to portfolio administration services such as wraps and master trusts to ease their back office burden.

Philip reckons this will all change with low cost consolidation and transaction sys-tems. These systems will have the records of a huge number of clients which will be easily accessed and sent via the Internet to the fund manager of choice.

InvestmentLink has signed up 14 fund managers to its service which has been op-erating for a number of years. InvestmentLink is also negotiating with a number of other high profile funds management groups to join the service in coming months.

Philip is quick to point out that the InvestmentLink service is aimed solely at fi-nancial planners.

“You will never see an ad. in the paper asking people to invest through the Invest-mentLink system,” he says.

“We are in the business of providing the technology solutions for the financial planners who have interaction with clients.”

InvestmentLink has laready signed up more than 2500 advisers to the system, in-cluding Count Wealth Accountant’s 1000 advisers and RetireInvest’s 250 advisers. The group also signed an agreement with Lonsdale to offer the service to its 100 advisers plus the advisers who use its software products.

One of the first to market the service to consumers is Neville Ward Direct. Neville Ward is a financial planning firm which also offers a range of managed funds for consumers looking to transact without advice.

The strategy for groups like Neville Ward is to attract the loyalty of consumers when they wish to transact without advice. When they have built up a significant investment portfolio and require investment advice, these consumers can then use the financial planning service.