Sealcorp takes a swipe at industry fees

Sealcorp chief executive Ian Knox has called for a comprehensive review of “soft dollar revenues” across the financial services industry.

While the institutional funds management market has already set standards in the disclosure of soft dollar deals, or deals between fund managers and platform providers, Knox says it is now time for platform and trust operators to do the same.

“The platform industry is being pigeon holed into controlling distribution. The true destiny of the industry is to effectively have an array of providers, not just offer a single offering with deal-making behind the scenes,” he says.

Knox says the recent launch ofColonial’s FirstChoicemaster trust, which has the highest commission structure in the industry, according to Knox, is of real concern to both the consumer and the direction of the industry going forward.

“That is not progress for consumers,” he says. “We should be passing through all scale benefits to the consumer.”

Knox says the industry has now blurred the issues of fee disclosure and fee reduction, making it difficult for the consumers to understand who takes what in the value chain, and he says unless the industry takes some action, the regulators will be encouraged to step in.

Knox saysAsgardis the only group in Australia which presently re-distributes economies of scale to consumers, actually passing on additional discounts struck with fund managers to Asgard investors.

They do this by negotiating a fee with fund manager based on the amount of money invested with them. This is then rebated to Asgard who calculates this as a dollar value which appears on the client’s statement.

“It is money in [the investor’s] account,” Knox says

Knox says with the Superannuation Guarantee recently increasing to 9 per cent per annum, people are being obligated to invest money, with much of it ending up in trust. He says with the current state of fee disclosure, the margins on some of these products is reprehensible.