Advisers demanding more from technology and platform providers


Shannon Bernasconi

The expectations from financial advisers on the ability for software and platform providers to act transparently and with integrity has substantially increased since the release of the Hayne Royal Commission findings, according to WealthO2 managing director, Shannon Bernasconi.

Commissioner Hayne’s report had a focus on the monetary benefits that flow to advisers and licensees, however one area left mostly untouched was the benefits that flow to product providers.

Ms Bernasconi said while FASEA’s Code of Ethics puts the onus on advisers to remove conflicts and act in best interests of the client, the requirement for technology providers to align their software service to this same effect remains somewhat opaque.

According to Ms Bernasconi, advisers are demanding open architecture that doesn’t restrict them from delivering what is in the best interest of their clients, as well as the ability to choose from a competitive landscape of financial products and services used in the creation of the advice.

“Product restrictions and hidden fees add more compliance disclosures and potential issues with regards to best interest and can add further issues of conflicts onto the adviser,” she said.

“Advisers want to build meaningful relationships and partnerships with providers that enhance their own value proposition, as opposed to buying a product from a shelf or a ‘user licence’. Honesty and integrity from service providers is paramount,” she said. 

Research undertaken by WealthO2 suggests advisers are increasingly needing ongoing support and automation of compliance like ROAs, audit trails, controls, alerts and monitoring. Flexible and reliable reporting systems that can integrate into financial planning software is also paramount.

Additionally, they require a flexible delivery mechanism and one that allows an expression of their own brand in continuity of communications like ROA’s and quarterly reporting requirements.

“Technology should be of a standard that it reduces administration, lowers costs, reduces risk and increases the efficiency and scale.

“Time saved on administrative and compliance tasks can then be better spent on delivering for clients and growing their advice business and increasing margins,” said Ms Bernasconi.

Platform providers also need to move to transparent administration fees, linking the true cost of the recommended platform to the service the client is paying for.

“Advisers need to pay close attention to some of the fees or hidden costs being charged to their clients from platform providers, with revenue often being extracted from the assets of the client in a non-transparent way. 

“One of the more obvious ways that costs can be charged is by offering clients a very low cash rate. When interest rates were higher this was considerably more apparent, but it’s clear from a lot of the ASX-listed platforms that are forced to disclose where they generate their revenue from, that a large proportion of their margins have been made off clients’ cash. Not an ideal outcome for an adviser to explain to a client.”

Ms Bernasconi said that while there are many challenges to navigate through, this is the right time for the industry to become a profession, including restoring public trust and confidence.

“Advisers and advice, not products, are the essential lead in the wealth value chain, and the ability for technology and service providers to align to these principles, and ease the administration and compliance burdens, will go a long way in securing the best possible outcome for clients,” Ms Bernasconi said.

You must be logged in to post or view comments.