Wealth industry set for growth

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COVID-19 has not slowed the growth in the Australian wealth industry, with the number of products registered over the past 12-18 months significantly higher than the ten-year annual average, according to APIR chief executive, Chris Donohoe.

Mr Donohoe made the comments at the inaugural 2020 FSC Investment Summit, of which APIR is principal partner. APIR provides the codes that are the standard identifies for collective investment schemes such as managed funds and superannuation funds in Australia.

He said APIR has observed the second consecutive year of ten per cent year-on-year participant or product issuer growth, which hasn’t come from the sources expected.

“Interestingly, much of the growth in product registrations has come from more vanilla funds such as traditional equity funds and property trusts, which is great for the industry.

“We did observe some rationalisation in the investment options segment of the superannuation industry but nothing out of the ordinary. It shows that the domestic wealth sector is resilient and has largely been able to withstand the shock of the pandemic,” he said.

Mr Donohoe said the growth also demonstrates the ability for financial services organisations to adapt and innovate despite the challenging market conditions of recent months.

“The fact that financial services providers continue to innovate and engineer products that attract investor demand is encouraging,” he said.

APIR has also engaged with key industry stakeholders, including the FSC, on extending its data collection capabilities to act as a ‘source of truth’ for Target Market Determinations (TMD). TMDs are a requirement for every financial product under the Design and Distribution Obligations (DDO), a new regulation by ASIC which will place the onus on product issuers and platform providers to ensure products are suitable for the market being distributed to. 

With APIR already interacting with providers of managed funds, managed account and superannuation funds, APIR has existing infrastructure to accommodate the rollout and ongoing management of such a service.

“We already collect and maintain data for these providers, and a TMD repository would be an extension of our utility function and a centralised source for distributors to easily access TMD from the one place and negate them having to obtain TMDs from multiple product issuers.

“Industry engagement will ensure all financial product providers can benefit from the DDO initiative,” he said.

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