A wave of regulatory change, combined with the shifting needs of advisers in the self-managed super (SMSF) fund space, could serve to drive financial advisers away from platform-based investment strategies.
Senior technical manager at Colonial First State Craig Day told InvestorDailythat a lot of SMSF advisers are now starting to take their clients off-platform, away from more restrictive wraps and masterfunds. “They want to run the SMSF and provide administration services to the fund as well,” he said. “But some of those businesses are starting to find that very labour intensive and difficult and they’re actually migrating back on-platform.”
In those cases, advisers are looking at using an SMSF with a wrap product, which Mr Day said was to “reduce business risk and increase operational efficiency”.
Wealth Within chief analyst Dale Gillham told InvestorDaily advisers will struggle to service their “C and D” clients when adhering to the post-Future of Financial Advice (FOFA) remuneration models.
Platform fees will need to come down to reduce the cost of business for advisers and allow them to continue to service “mum and dad investors,” Mr Gillham said.
“It’s just about reducing cost base, and the cost of providing advice has been traditionally high because the industry is run by large dealer groups,” he said.
“Your big players just can’t move. They’ve bought legacy systems and it’s very old technology, banks have very old technology and it’s too expensive for them to change,” Mr Gillham said.
Mr Gillham said over the next five to 10 years, as FOFA takes hold and remuneration structures change following a conflicted remuneration ban, people will start to move off platform.