Planners can wrest SMSF mantle
The advent of new technology and offerings from companies such as AMP and BT may see financial planners wrest self-managed superannuation fund (SMSF)-related business away from accountants, according to a new white paper produced by Arnhem Investment Management.
The document, released this week, argues that the astute use of new technology may enable planners to "seize the role that accountants have enjoyed as gatekeepers to the SMSF sector".
"By dint of their ability to package up accounting, tax and audit functions with their SMSF administration, accountants have attracted a good deal of the work that otherwise would have flown to professional financial planners," the white paper said.
However, it said the ability of financial planners to offer an all-in-one solution incorporating these accounting and tax services — using the sort of platforms being developed by BT and AMP, and "at lower cost to boot" — meant that accountants might be cut out of the value chain.
The white paper said that another potentially positive development down the track for financial planners, whilst a long shot at present, would result from the dangers posed by SMSFs managing their own investment strategy.
"This could eventually see some sort of requirement for mandatory advice for SMSFs that could be a lucrative additional income source for the financial planning sector," it said.
Elsewhere in the white paper, Arnhem Investment Management argues that the vertically integrated model reflected in companies such as AMP has not necessarily helped margins, with a consistent decline having occurred.
It said that AMP's acquisition of AXA Asia Pacific should, ordinarily, have helped the company offset margin pressures because of the resultant synergies and scale.
However, it said this might not necessarily occur because wealth management did not represent an ordinary market, and vertically integrated players like AMP had an even more diversified group of competitors to contend with — competitors that, "like industry funds, may not be pricing completely rationally, given that they have motives beyond their wealth management business".
The white paper said that group of competitors was the four major banks.
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