Doug Morris

Amid ongoing debate by Australian legislators and regulators on the future of financial advice, including how to restore advisor numbers and meet the needs of a growing demographic nearing retirement, the role of technology is both central and critical.

With more than 40% of advisors having exited the industry since the Royal Commission, and 68% of those remaining now choosing to go self-licensed, independent advisors need to be flexible and profitable.

According to research from Sharesight, financial advisors face five key challenges: tech adoption, personalisation, self-managed investing, generational engagement, and cybersecurity. Each challenge also presents a clear opportunity for advisors who embrace digital tools and rethink traditional service models.

“There’s a real opportunity for tech-enabled advice to meet the needs of today’s ‘missing middle’ and tomorrow’s digital-native recipients of the $5.4 trillion generational wealth transfer,” said Doug Morris, CEO of Sharesight.

Sharesight’s research highlights how client expectations are rising, even as advisors are being asked to do more with less. The average advisor now serves 129 clients, up from 83 just five years ago. In this context, automation and personalisation are critical to business viability for independent financial advisors.

“Analysis of recent licensing dynamics shows a major industry trend, as almost half of advisors are switching licensees and choosing to go self-licensed,” Morris said. “It’s being driven by a combination of strategic and financial factors, namely the opportunity to get high-quality advice into the hands of more Australians, and the challenge of running a profitable advice business when you go out on your own.”

Ben Wieland, Partner at EGU, the Brisbane-based bespoke wealth advisors, said digital tools like Sharesight help to improve client conversations and streamline reporting.

“One of the big things to remember is that brokers and funds aren’t reporting houses – they’re just intermediaries to get you the asset. Sharesight fills a gap. Its reporting makes portfolio conversations clearer and more client-focused,” Wieland said.

The ‘missing middle’ is a term that is used to describe an underserved segment whose total wealth, including superannuation, disqualifies them as an ideal fit for a full-service advice model. Many potential clients in this group are looking for a hybrid experience: simple personal advice paired with digital tools.

“Clients who make up the ‘missing middle’ are typically those who want to self-direct their equity investments and superannuation journey,” Morris said. “Simple questions, like how to give the right information to your accountant at tax time, shouldn’t require a complex answer,” he added.

The research also explores how digital portfolio tracking tools like Sharesight help advisors streamline reporting, simplify compliance, and deliver more meaningful conversations with clients – especially in areas like tax reporting, risk analysis, and income planning.

“Digital tools mean advisors can scale efficiently by reaching more clients and expanding access to financial advice. That’s a benefit across the board, to improve Australians’ financial wellbeing, especially in retirement,” Morris said.

Read the research report.

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Doug Morris

Sharesight has integrated with Desktop Broker, allowing advisers to have their clients’ trading data automatically synced to Sharesight’s portfolio tracker. By having Desktop Broker trades automatically populated in Sharesight, advisers can effortlessly track their clients’ investment performance, benefitting from Sharesight’s intraday price and performance data, plus automatic dividend tracking.

What is Desktop Broker?

Desktop Broker is an easy-to-use trading platform with a premium support service and access to research and investment opportunities from Bell Potter. Key features include:

• Peace of mind – Established in 2007, Desktop broker is part of ASX-listed Bell Financial Group (ASX: BFG)
• Better insights – You get exclusive access to Bell Potter research and daily market commentary
• Better adviser support – Tailored solutions to grow your business from a team who understand adviser businesses
• Flexible brokerage – Low-cost trade execution on desktop or mobile
• A proven platform solution – Over 4,500 advisers already use Desktop Broker for their investment decision support and trade executions.

Why has Sharesight connected to Desktop Broker?

“At Sharesight, not only do we help individual investors track their performance and make better investing decisions, but we also make it easier for professional investors to track their clients’ wealth by automatically recording their trading data and providing a consolidated view of their investments,” says Sharesight CEO, Doug Morris.

“With thousands of Australian advisers trading on behalf of their clients using Desktop Broker, it made sense for us to integrate our software to supply advisers with superior performance data while also saving them time on reporting.”

“This integration streamlines advisers’ workflow, enhancing their ability to serve clients efficiently. With the integration, we’re eliminating manual data entry, which reduces errors and frees up valuable time for advisers to focus on what matters most — providing strategic guidance to their clients. This underscores our commitment to innovation and delivering solutions that empower advisers”, says Martyn Johnston, Head of Partnerships at Desktop Broker.

Benefits for advisers

Comprehensive performance reporting: Sharesight shows the true picture of a portfolio’s performance by providing a total annualised return that takes into account the impact of capital gains, dividends, brokerage fees and foreign currency fluctuations. Advisers also gain access to a powerful suite of performance reports designed to help them make better investing decisions, including performance, diversity, exposure, contribution analysis, multi-period, multi-currency valuation, sold securities and future income.

Connect Sharesight and Xero

Sharesight’s software is linked with Xero to provide a seamless solution between portfolio management and portfolio accounting. When advisers connect Sharesight to Xero, details of share purchases, sales and dividends flow into Xero automatically, allowing them to be easily reconciled against bank statements and included in their clients’ overall wealth picture.

Never pay more than you need 

With Sharesight, both advisers and their clients can enjoy the benefit of managing growing portfolios without incurring additional costs.

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​Chris Ridd (Left) ​with Doug Morris.

Leading wealth portal myprosperity has announced a partnership with premier share portfolio tracker, Sharesight. Clients who use Sharesight to track their investments will now be able to view them from within their myprosperity wealth portal.

The direct integration of Sharesight portfolio data within myprosperity is the latest milestone in the company’s ambitious journey to create a comprehensive shared data platform for accountants, advisers, and consumers.

Chris Ridd, CEO of myprosperity, said “Sharesight tracks over AUD $10Bn worth of investments and are one of the leading share portfolio trackers in Australia. myprosperity clients have more than $80M in shares which they’ve entered into their wealth portals. This partnership with Sharesight is another step towards giving Australians a full view of their wealth portfolio and empowering their accountants and advisers to provide insightful advice powered by live data.”

myprosperity’s white-label, personal wealth portal provides a consolidated, real-time view of a client’s entire financial world, thanks to live integrations with leading financial services providers. Available on desktop and via mobile app, accountants and financial planners grant access to their clients on a subscription basis.

Doug Morris, CEO of Sharesight, added “We are excited by this partnership with myprosperity. Financial professionals are seeking line of sight across their clients’ investment portfolios and this integration showcases the technical capabilities of our API. Marketplace as a concept – to integrate the best services for the best in class functionality – will lay the foundations of open banking and act as an example of what the future could look like. We welcome myprosperity’s clients onto the Sharesightplatform.”

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According to Andrew Bird, executive director of online share portfolio management specialist Sharesight, so long as DIY investors have done their research and set themselves up properly, geography should pose no barriers.

“With relatively strong performance, not to mention the much broader choice of companies and industry sectors to invest in, it’s understandable that Australian investors may be looking further afield. And, should they decide that investing offshore is right for them, there are a number of issues for them to consider,” said Mr Bird.

He went on to explain that of the available options, each has its pros and cons.

First is trading through a local, Australia-based broker – and most major players now offer an overseas trading service. This is relatively straightforward – especially if you are used to trading with that provider – and you can generally pay for trades from your existing broker cash account.  Brokerage fees are higher than for Australian shares  and there can be additional fees for things like custody and foreign exchange which can eat into returns if you make a lot of trades. But for those investors looking to trade infrequently overseas this can be a good option.

A second option is to open a trading account directly with on overseas online broker, which does require some initial paperwork but is simple to run once you’re set up. The benefit of this approach is significantly reduced brokerage fees and, according to Mr Bird, it may be a good option for an investor who has already tried an Australia-based broker and begun to trade more heavily overseas.  Foreign exchange costs can also be controlled more easily by transferring funds to an overseas account in larger tranches.

Option three is to choose a pooled investment vehicle such as an international Exchange Traded Fund (ETF), which is traded on the ASX, or a managed fund.  These allow you to buy whole markets with one stock or have a professional manager choose for you in the case of an active managed fund.

“There are some quality overseas ETFs now available on the ASX that cover the major overseas indices. These offer investors the benefit of exposure to a wider range of shares than they might be able to access directly, are cost effective and are listed on the local exchange, so can they can be traded through your local broker or online trading service,” said Mr Bird.  “A traditional managed fund which focuses on overseas shares can also provide offshore exposure, with associated expenses dependent on the manager.”

It’s important to note that ETFs are generally unhedged with regard to currency so the local value will be determined by the performance of the index it covers, like the US S&P 500 as well as the currency movement between the Australian dollar and the currency in which the index is denominated.  Managed funds are often available in hedged or unhedged options, enabling investors to decide how to address the potential positive or negative effects of currency fluctuations on the value of their investments.

Once the decision on where and how to invest is made, it’s a question of making sure you administer the portfolio properly, to ensure you address factors such as currency shifts and the offshore taxation requirements.

“That’s where using a portfolio management system that’s been set up to administer international as well as local equities comes in,” said Mr Bird. “At Sharesight, for example, we offer date on five international markets, including the NASDAQ, NYSE, London Stock Exchange and New Zealand Stock Exchange. This helps keep investors up to speed with the latest in dividend information, corporate updates and so on, just as they would expect from their local Sharesight data.”

Two other significant international investing bugbears: currency conversion, which is automated for the user so they can see at a glance their true Australian dollar position; and the taxation issues, are also addressed by the Sharesight system.

“Some offshore markets impose a withholding tax that can be increased if overseas investors don’t properly register with the relevant authority,” he explained. In the US, for example the withholding can be 15% or 30%.

“Once they do register, which the broker will facilitate, Sharesight captures that information so the investor can be sure to record the correct tax credit.

“What it all comes down to is, if you’ve done the research and believe there are benefits to be found offshore for you, investing overseas need not be difficult.  But it’s crucial to keep accurate and timely records so that the paperwork doesn’t detract from the benefits.”

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“Many investors consider the performance of their share portfolios only in the context of changes to the stock price,” Mr Bird said.

“Investors should instead concentrate on understanding the true performance of their portfolios without focusing too much on short-term share price fluctuations. The long-term performance of a portfolio generally more than compensates for short-term ups and downs.”

Determining the true performance of a portfolio over the term of the investment should include a review of the following key factors:

• Annualised returns
• The impact of dividends and franking credits
• Currency effects from overseas equity investments
• Valid comparisons with returns from other alternative investments.

An annualised return enables investors to factor in share price movements over selected time periods for any individual stock or for a whole portfolio.

“If a stock’s price rose from $1 to $1.20, an annualised return will factor in how long it took for that price to increase. If it went up 20 cents in two years, it is only half as good as if it rose the same amount in one year,” Mr Bird said.

Share dividends were also an important factor to consider because they could often be more significant than a price change.

“A lot of people grossly underestimate the impact of dividends, particularly in the current tumultuous market conditions where a stock’s price might drop but it won’t affect the dividend the company will pay,” Mr Bird said.

Investors should also consider the impact that franking credits have on reducing or eliminating their tax liability for the dividend received from the company, depending on their marginal tax bracket. 

Mr Bird said that understanding the true value of a share portfolio enabled an investor to more accurately compare the returns with other investments and make balanced portfolio management decisions.

 “If you don’t know how well your portfolio is performing it can impact on the level of enjoyment you derive from monitoring its progress and from the rewards it generates,” Mr Bird said.

“It also means when you have a sudden downturn like we are experiencing at the moment, you don’t have the tools to accurately assess the impact on your portfolio, which can lead to panic selling.

“Having a good handle on a portfolio’s long-term performance can remind the investor that, even if they have lost money in the short-term, they are doing pretty well considering the overall period of their investment.”

For example, CBA’s total return over the last six months to 18 August 2011 was – 8.1 per cent, including a capital loss of 13.6 per cent and a dividend return of 4.8% per cent from the interim dividend received during the period.  This compares with its 10-year return up to the same date of 9.4 per cent per annum, with capital gain of 4.0% per cent and a dividend return of 7.2% per cent per annum.  The dividend provided more than half of the total return to the investor over this period.  This is not uncommon for many of the large dividend paying stocks in the ASX/S&P 200.

An online share portfolio management service like Sharesight is able to provide investors with a holistic view of the true performance of a portfolio with prices and dividends automatically updated daily.

“Many investors dislike record keeping and struggle to keep track of their portfolios because annualised returns are complex to calculate and investors do not have price, dividend or currency movement data at their fingertips” Mr Bird said.

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Andrew Bird, Executive Director of Sharesight, believes cloud technology benefits advisers by enabling planners to offer new service lines to both existing and new clients.

“Cloud computing allows planners and their clients to access portfolio performance and admin records online, on demand, from any computer in the world,” Mr Bird said.

“Services that automatically collect performance and tax reporting information also allow planners to access their clients’ up-to-date records instantly – meaning that advisers are freed up from the time-consuming admin work to concentrate on the roles they really enjoy such as portfolio construction and offering advice.”

Mr Bird also believes that cloud technology can open up new client bases for advisers.

“Cloud computing software can also enable planners to offer advice to investors on limited budgets as the admin and reporting work will already be done for them, reducing the cost to the adviser of servicing their needs. This means that clients can spend the hours they can afford with an adviser on more high-level issues than tax and record-keeping.

“According to the ASX, over 6.5 million Australians, or 39% of the adult population, directly own shares1. There is obviously a huge market of self-directed investors out there that financial advisers could support but I know from feedback from Sharesight members that many of those people feel they cannot afford the services of a financial adviser. However, using software such as Sharesight to reduce the admin burden on the adviser can make professional advice much more affordable.”

As the popularity of cloud computing grows, Mr Bird believes advisers will see increasing benefits from the interconnectivity the technology provides.

“More and more financial institutions are considering cloud computing as a service for their clients as it allows data to be entered into the system once and then automatically shared with other relevant, designated systems as needed. This will create both efficiencies and opportunities for planners when advising their client in future.”

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