Platform v adviser: Who decides on product selection?
With more funds seeing assets frozen, platforms have shared with Money Management how they guard against holding a troubled product.
ASIC commenced court action against Keystone Asset Management as the responsible entity for Shield Master Fund in June 2024 and obtained an order for freezing of the assets to preserve Shield’s monies and managers, and receivers were appointed. Subsequently, voluntary administrators were appointed.
Appearing before the standing committee on economics on 25 October, ASIC deputy chair Sarah Court said the regulator is exploring whether there are concerns about Macquarie and Equity Trustees which offered the Shield fund on their platform.
She said: “Where this relates to Macquarie is that consumers who invested their superannuation in Shield Master Fund did so through two superannuation platforms.
“One of those was hosted by Macquarie and the second was hosted by Equity Trustees.
“We are looking at whether there is any conduct of concern regarding Macquarie and Equity Trustees in regards to their facilitation of those very significant investment sums through those platforms.”
Other problems have affected property investment fund, Global Credit Property Fund (GCPF), offered by United Global Capital which had liquidators appointed in October.
In light of this, Money Management spoke with three platforms on their governance processes around which funds they hold on their platform and how much responsibility sits with the adviser regarding product selection.
At Insignia, which owns MLC and Expand, Liz McCarthy, CEO of MLC Expand, said the obligations lay both with the trustee and the financial adviser.
The firm recently announced it has passed $10 billion in funds under management in managed account solutions and has $75 billion in funds under administration.
She said: “Both the trustee and financial adviser have obligations to the underlying members. The investments that a trustee makes available to members need to satisfy the superannuation investment governance obligations. In addition, an adviser needs to meet the client’s best interest duty.
“Depending on the type of investment (e.g. managed fund, ETF, hybrid, etc) some of the criteria we look at for inclusion on our Expand platform are: performance relative to benchmark and peer relative performance over the short and longer term, fees and costs (total and relative to asset class), external research house ratings, and ratings and views from Insignia’s internal research.
“We also conduct a due diligence review of the investment manager, including requiring documents evidencing its processes and undertaking a stress testing assessment, consider ESG factors and the overall appropriateness of the investment option to be offered to members having regard to its target market determination.”
Over at BT, which holds almost 900 managed funds on its platform, the firm said it collects a range of information from fund managers before a fund is made available on its BT Panorama platform.
“All investment options are required to meet investment governance criteria before being made available on BT Panorama, and all managed funds are also subject to ongoing governance reviews and monitoring. To support this, BT collects a range of information from fund managers, including but not limited to: fund disclosures, policies, research information and liquidity and market stress testing,” a spokesperson said.
However, it noted that the investment solution is ultimately up to the investor and their adviser.
“It’s important to note that investment selection is ultimately up to the investor, typically with the help of an adviser.
“We also make available to clients and their advisers a range of information on managed funds (prepared and issued by the funds), including each fund’s product disclosure statement (PDS), available through BT Panorama and the website.”
Finally, Praemium said the level of governance will depend on whether the product is superannuation, managed accounts, or an investor directed portfolio service (IDPS). The platform has total funds under administration of $59.4 billion as of 30 September.
“Praemium has a robust due diligence and investment governance process for all funds approved for access via our platform, overseen by an investment committee of five, which includes an independent member.
“For funds seeking inclusion on our Super menu, these go through an additional stringent review by our Trustee Diversa and their investment committee.”
AUTHOR
Laura Dew
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