Outlook for wealth management advice business in 2018


Andrew Alcock

The Australian wealth management industry is expected to transform even more next year as the work-out from the Future of Financial Advice (FOFA) reform couples with the recent enforcement of the Best Interest Duty requirements.

Some financial institutions are addressing this by severing their wealth businesses from their operations, as seen by ANZ’s sale of its wealth business to IOOF and CBA assessing the floating of its Colonial First State Global Asset Management.

For others seeking to retain their wealth operations, they will have to ensure they provide choice for investors to meet their Best Interest Duty obligations.

The confluence of these structural changes may see institutions forced to expand their offerings and the way they provide them to investors, such as providing their salaried and aligned advisers with access to non-insto aligned investment offerings and platforms.

“We’re seeing the transformation of the existing wealth management advice model,” notes HUB24 Managing Director Andrew Alcock.

“Advice arms of institutions are having to come to terms with their obligations under the best interest test and that’s putting tension on the traditional way they’ve operated.  This is challenging the status quo and forcing them to think about their models.

“Just as we have seen with the choice of insurers on APLs I think it’s only a matter of time until most financial institutions open-up their approved product lists to provide more choice and to ensure they can deliver on their advice obligations.

“Non-insto aligned platforms offer a simple solution providing financial institutions with the offer of choice that investors need under the Best Practice requirements, and separating the provision of financial advice from the distribution of product.”

Increasing choice

Echoing this transformation, the growth in the number of financial advisers associated with non-insto-owned licensees in the 12 months until March this year was five-times the growth of those associated with the major financial institutions (including banks), according to Rainmaker Advantage Report March 2017.

In other words, non-insto owned licensees house a third of Australia’s financial advisers, but currently account for two-thirds of the industry’s growth.

It is a similar story with the platforms they use. According to the Investment Trends 2017 Planner Technology Report, non-insto aligned platforms are growing the fastest and topping the polls for client satisfaction.  The same report also adds that some three quarters of the overall universe of Australia’s financial planners (75%) say they are open today to switching their primary platform, expressing dissatisfaction with the status quo.

This is increasingly being played out in market share of new flows, with the final quarter of last year seeing net outflows across bank and institutional platforms, according to Strategic Insights – Analysis of Wrap, Platform and Master Trust Managers Funds.

Connectivity, value, openness and choice

Mr Alcock expects these trends to deepen and “further transform the wealth management industry. We also expect an increased focus on connectivity, value, openness and choice. The wealth and platform landscape is transforming.

“Non-insto aligned advisers, brokers and accountants are increasingly leveraging new technology to improve client engagement, increase efficiency and reduce costs. They seek to integrate data and reporting functions for improved user experience and back-office efficiency.

“Helping them connect data enables them to better advise their clients, create greater value and grow their business.” he says: “Standing still is not an option and platform providers need to stay abreast of the latest technology developments.

HUB24, for example, has partnered with Australia’s leading personal wealth platform – myprosperity – to enable its users to view their assets within their personal portal for a more complete view of their ‘whole of wealth’.

“This enables advisers and accountants on both platforms to take a consolidated approach and transform the way they service customers by providing real time, bespoke information to clients on their personal financial position,” Mr Alcock notes. “By minimising time spent on administrative tasks and providing their clients a bespoke wealth portal powered by live data feeds, advisers can grow their digital brand and increase their revenues.”


Mr Alcock adds: “Technology has already lowered the cost of operation and improved efficiency for most planners, brokers and other providers and enables them to better advise and respond to their clients’ needs.

“Technology, especially open architecture, is key. It enables greater responsiveness to changing conditions, be it markets, business or regulation. We can meet advisers’ developing needs as well as those of their clients – and that is what this transformation is all about, empowering customers – advisers and their clients.

“All this can translate into real, tangible benefits. For instance, enhanced functionality on platforms that can make a real difference to clients’ wealth accumulation over time – such as through tax modelling and tax optimisation tools.”


Mr Alcock notes that HUB24 is profitable and growing. “Among the noise, we are focused on delivering to our strategy.” In the 2017 financial year, it delivered a maiden net profit of $3.9m on 45% higher revenue. Funds under administration increased to $6.6 in the first four months of FY2018 from $5.5 billion end June 2017.

In FY2017 the company also increased its number of advisers using the platform by 39% to 917 and is now approaching 1,000.

In early 2017, the company also acquired Agility Applications, which provides tools to stockbrokers – a sector also undergoing structural change as they transform from research and broking to financial advice. Integrated with its new subsidiary, HUB24 Group launched a white label platform solution for Euroz Limited to deliver a broader set of investment choices for Euroz’s clients, while also providing them with first class administration and reporting tools.

“Overall, 2018 looks like a good year for advisers, as platforms and their continued technology improvements helps them better deliver advice to their clients,” Mr Alcock suggests.

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