Still waiting on a platform

Damian Crowley

Separately-managed accounts (SMA), direct property, and managed investment schemes cannot be handled by platforms, nor can they be included in the consolidated reporting systems.

One accountant Money Management spoke to said with self-managed superannuation funds (SMSF), the clients bring in the consolidated report from the platform with three or four other bits of paper for investments not on the platform. It ends up with the accountant undertaking the consolidated reporting for the fund.

However, platform providers acknowledge the shortcomings and are working to include more products and services on platforms.

Aviva general manager wealth and products Andrew Barker said there was still a huge potential for products and services to be added to platforms.

“We will always look at where the new dollars are going and we will then seek the latest technology to attract the adviser,” he said.

“Which means the capital investment in platforms will continue to be large.”

Barker said demand for innovation and change will continue to be at the forefront, an example is the change to superannuation laws on July 1.

“We see these as a new opportunity, but we have to develop a new strategy to ensure Navigator stays competitive,” he said.

“It is also an opportunity to look at the back-end (of Navigator) and put into place software to improve the administration.”

Platform operators continue to work on bundling the front-end software with the back-office administration.

Currently Iress is acquiring VisiPlan software to link in with its successful Xplan.

With the addition of PlanTech last year, the company is working towards a ‘virtual platform’, although there are few details yet of what this would actually involve or how it would work.

Barker said the next major step for the traditional platforms is to introduce SMAs on the system.

“It looks difficult to integrate into the platform and the real challenge will be to make it easy for the adviser to use,” he said.

“We have multi-broker functionality and SMAs is adding to this, but the different portfolio of shares will have to be something we will have to cater for.”

MLC general manager superannuation and investments Anthony Waldron said services on platforms can grow further and agrees options focusing on direct equities will grow.

“But the key is making the reporting easier while ensuring the functionality is still in place,” he said.

“You also have to integrate any new options with the other parts of your offer, such as planning software.”

Waldron said the other point to remember is while the MasterKey platform offers access to all Australian listed shares, most of the advisers mainly use the well known stocks.

“It goes back to the 80/20 rule where most of the money goes to a few investments,” he said.

“But you have to have the flexibility to offer the adviser the choice.”

Perpetual general manager adviser distribution Damian Crowley said a lot of the benefits of using platforms was still to be realised.

“Very few people have introduced real straight through processing,” he said.

“This is right through from the adviser to the fund manager, although many people are working on it.”

Crowley said one problem was every fund manager operates on different systems, but the industry was working with the Investment and Financial Services Association to develop standard protocols.

“We will be seeing a lot of development of the functionality of platforms,” he said.

“We are introducing BPay for investment applications and that will make a substantial difference for advisers.”

Crowley said the efficiency question is related to margin pressure, which means platform operators are looking for extra functionality.

“We do see the unbundling of fees and increased transparency,” he said.

“I think you will see advisers looking for the platform to match how they charge for their services.”

There is a demand from some fee-for-service advisers to drop rebates as reallocating the charges back to the client adds to the complexity of using a platform.

“We offer to rebate the fees to the client and that makes it easier for the adviser,” Crowley said.

“But you can add certain service fees as a percentage in dollar amounts.”

He said unbundling fees to offer the adviser flexibility for whichever payment system they use will be a key focus for platforms in the next couple of years.