Large platform providers were not catering to small to mid-sized financial planning licensees with their managed discretionary account (MDA) structure, and instead only offered the structure to larger dealer groups that offered fixed portfolios to choose from.
Melbourne-based boutique firm Moran Howlett Financial Planning’s principal Paul Moran said platforms did not accommodate the smaller firms that wanted to run their clients’ portfolios more actively, and it lacked the functionality to handle term deposits, direct investments and managed funds together.
“They need to offer an actual MDA service within their platforms on a firm-by-firm basis, whereas they tend to offer them now to large licensees that have research houses that become centralised portfolios that they’ll call an MDA,” he said.
“That way there’s no active involvement from the financial planner. It’s easier and cheaper to cater for the big firms. That’s what it boils down to.”
The firm, which has 350 clients and $160 million in assets under advice, moved from wrap platforms and self-managed superannuation fund administration service to an MDA last year.
Moran said the decision to transition came about because the firm felt platforms were based on a product mentality, while the MDA structure was based on a client mentality.
Under the structure, clients authorise the financial planners to make the transactions, which means they can transact at their discretion within the parameters of strict rules and guidelines.
“I’m imagining that platforms will eventually move this way but they’ve been too slow for us.
“We’ve been promised enhancements from the platforms for a long time and I guess it was either a case of wait around for another long time and hope that they’d eventually provide the service that we’re looking for or we’d take something that’s available right now,” Moran said.
