Regulation still crippling platform budgets
Platform providers are still bleeding hundreds of millions a year on regulatory compliance, at the cost of improved functionality, an Investment Trends report shows.
Compliance last year absorbed around 55 per cent of providers' budgets, up from 51 per cent the previous year, according to the December 2014 Platform Report.
At the same time, spend on new functionality fell 22 per cent, to five million for the average Wrap or Master Trust, down from $6.4 million in 2013.
The quandary could put platform/planner relationships in jeopardy, with planners signalling a willingness to uproot if the provider cannot meet their functionality.
"Planners are expressing greater freedom of platform choice in 2014 and switching away from those who don't meet their needs," Investment Trends senior analyst Recep Peker said.
However, platform providers have responded quickly, according to the survey, which recorded the highest planner satisfaction score in 11 years.
"So, despite constrained budgets, platforms are fighting to efficiently provide the best functionality that meets the needs of their users," Peker said.
When it came to favoured platforms for overall functionality, Colonial First State FirstWrap held the first spot, followed by netwealth and HUB24.
"Competition has become very intense at the top end, but Colonial First State FirstWrap managed to retain its position as number one in the industry following another year of significant functionality enhancements," Peker said.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
