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
Licensing regulation should prioritise consumer outcomes over institutional convenience, according to Assured Support, and the compliance firm has suggested an alternative framework to the “licensed and self-licensed” model.
The chair of the Platinum Capital listed investment company admits the vehicle “is at a crossroads” in its 31-year history, with both L1 Capital and Wilson Asset Management bidding to take over its investment management.
AMP has settled on two court proceedings: one class action which affected superannuation members and a second regarding insurer policies.
With a large group of advisers expecting to exit before the 2026 education deadline, an industry expert shares how these practices can best prepare themselves for sale to compete in a “buyer’s market”.
