Unbundling services suits fee-for-service financial advisers
Financial advisers who are ahead of the curve in terms of adopting fee-for-service will be more likely to find value in unbundling services rather than using an all-in-one wrap, according to Sharesight executive director and former Morningstar Australasia chief executive Andrew Bird.
"More financial planners over time, especially the good ones, will focus more on fee-for-service and the value they're providing," he said.
"Then they will become more agnostic about what systems they use. If they're in the right relationship with the client they can pick and choose what systems and investments suit that relationship without regard to having to sit inside a vertical investment platform," he said.
The current round of regulatory reforms is contributing to putting pressure on the industry to offer unbundled services, he added.
He said products such as Sharesight, essentially a do-it-yourself share trading platform targeting self-directed investors, will have more interest for financial advisers who have more sophisticated or high net worth clients who may wish to manage a segment of their own portfolio. Those clients are more interested in mixing and matching and can afford to because they have more to invest, he said.
The more hands-on approach doesn't sit will with the all-in-one wrap product, which is where the larger institutions have struggled with the self-managed super fund (SMSF) space, he said. Depending on the licensee, a fee-for-service financial adviser could use an online broker as an execution platform, a research platform such as Morningstar, and an administrator such as Sharesight, he said.
"If you're stuck with offering an all or nothing service, you run the risk of missing out on clients who want to mix and match a bit more. With a system like this you have an opportunity to offer them that service, whereas before there was only one way you could deliver that financial advice," he 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.
