Execution-only product circumvents platforms
Financial planners will be able to bypass platforms and access managed funds directly via a new execution-only service to be launched by investment administration services provider PowerWrap.
PowerWrap chief executive Cormac Heffernan said the service, called MWH Transaction Account, would allow planners who run their own portfolio administration to invest in managed funds alongside direct equities and exchange traded funds (ETF).
He said the cost of using the service would be based on transactions fees only, which would start at $20.50, as well as the applicable costs for the investments.
"Many platforms force advisers to use their technology and the features they have designed, while we believe there is a market for people who choose their own tools and use what they want," Heffernan said.
"What we are offering is a wrap account without the administration overlay or costs that planners can use as a single application to automate managed funds transactions undertaken for clients," he said.
Heffernan said planners would be able to create a Statement of Advice and investment strategy with their own internal systems and then place investments directly via Powerwrap, which would provide the necessary administration, reconciliation and reporting on the trades and the portfolio.
Iress senior business development executive Michael Kinens said Xplan had been in discussions with Powerwrap about providing access to the service through the desktop planning software, and beta testing was currently underway.
Xplan currently offers equity trading facilities directly into the ASX via the share trading systems of parent company Iress.
Kinens said the service would offer planners similar functionality to the Aqua II Managed Funds Service (MFS) system being proposed by the Australian Stock Exchange but at a cheaper cost to planners.
If adopted in its current proposed form, the MFS system would allow investors to apply to redeem unlisted managed funds on the ASX using its electronic settlement system, CHESS, via an ASX broker.
The MFS will offer access to funds covering domestic and overseas asset classes not currently traded on the ASX and would be held and administrated in the same manner as listed investment companies and ETFs.
However Kinens said he did not expect high planner usage of the MFS as most planners had settled administration systems and processes and would be unlikely to adopt a further system to access managed funds via the ASX.
His comments follow those of platform providers at the recent Money Management Platforms and Wraps Conference, who expressed concern over the rollout of MFS and its ability to bypass them in providing managed funds investments.
However the Powerwrap service and MFS may prove useful for boutique managers looking to bring new funds to market without having to pay the costs associated with a platform.
Recommended for you
With BlackRock recently combining both private and public markets in a single managed account for US investors, commentators explore the challenges and opportunities of doing so in Australia.
PM Capital has hit out at Platinum Asset Management, saying the firm only provided “limited engagement” following its bid for two listed investment companies.
Platinum Asset Management has seen outflows moderate during March, down 15 per cent from the previous month when it announced two major investment team changes.
Two listing experts have shared tips for fund managers to consider when it comes to launching their first ETF on an exchange.
