Planners’ businesses have continued to improve from last year

Recep Peker

Improvements across a range of key planner business metrics have given rise to increased optimism among financial planners, according to a new report from leading wealth researcher Investment Trends.

In its eleventh year, the May 2014 Planner Business Model Report is an in-depth study of Australian financial planners and their business processes. The study is based on a survey of 1,038 financial planners concluded in May 2014. This year’s study highlights a number of interesting trends:

“Our most recent study sees the average number of active clients serviced annually by planners edging upward, from a low of 141 in 2012 to 147 this year,” said Investment Trends Senior Analyst Recep Peker. “Rising markets and recovering client numbers are lifting assets under advice and hence revenue.”

“Planners have maintained a tight control over costs, with the average cost of delivering full advice falling from $2,400 in 2013 to $2,250 this year,” said Peker. “This has certainly contributed to 72% of planners citing improved practice profitability this year, up from 59% saying so in the previous study.”

Demonstrating value to clients and improving business efficiency are larger issues in the current environment, ahead of the regulatory burden and uncertainty from FoFA

Despite improving business conditions, almost all planners (98%) say they are facing challenges in their business with the typical planner highlighting 3.9 key business challenges.

While 73% of planners say they are facing regulatory-related challenges such as “compliance burden”, 81% are facing business challenges relating to demonstrating value and improving business efficiency.

“Although the regulatory burden posed by FoFA remains a major challenge for planners, demonstrating value to clients and improving business efficiency is now a greater priority,” explained Peker. “These challenges relate to new client acquisition, building efficiencies into their processes, providing affordable advice to lower balance clients and making clients aware of their value proposition.”

Aligned dealer group channels are at risk and we may be entering a period of increased upheaval

There is a 55% increase in the proportion of planners intending to switch dealer groups in the next 12 months (10%, up from 6% in the last study).

“We began measuring dealer group satisfaction for the first time in this years’ study, and found that planners working in majority independent dealer groups had higher levels of overall satisfaction compared to those working in bank or institutionally aligned dealer groups,” said Peker.

“As expected, dealer groups that have more satisfied planners typically have a smaller proportion planning on leaving,” said Peker. “To improve planners’ satisfaction, a key area for dealer groups to focus on is enhancing the effectiveness of the advice and review process.”

“By helping planners provide advice more efficiently and demonstrate value better, dealer groups can boost satisfaction and increase loyalty.

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Paul Resnik

Australian businesses invested a record $3.26 billion in software in the second quarter of 2014, reflecting the rising importance of information technology to the economy overall and to the financial services sector in particular, according Paul Resnik, Co-Founder of FinaMetrica, a software provider for the wealth management industry.

Second-quarter Australian National Accounts data from the Australian Bureau of Statistics (ABS) reveal the seasonally adjusted private software spend rose 2.4% to $3.26 billion in the June 2014 quarter, up from $3.18 billion in the March quarter. Spending jumped 8.3% from a year earlier.

The Australian economy grew 0.5% during the June quarter, to be up 3.1% from June 30, 2013. Productivity, as measured by GDP/hour, grew 2.8% from a year earlier and rose 0.9% over the quarter.

FinaMetrica, a leading global provider of web-based risk tolerance assessment tools for the wealth management industry, said greater regulation of financial advisers through Future of Financial Advice (FoFA) reforms has forced advisory businesses to spend money on compliance projects at the expense of investment in new technologies designed to promote business efficiencies.

“Compared to the US and UK, Australian advisers are using less sophisticated technologies and software. FoFA has been the immediate concerns for financial advisers so investment in technology and software to streamline business processes has suffered as a result. Yet it is this investment that can have the greatest impact on a firm’s profitability and its ability to serve its customers efficiently and transparently,” said Mr Resnik.

“Australian advisers, therefore, need to look at cost-saving solutions both for their clients and their businesses. As FoFA becomes less of a pressing concern, we can expect to see more Australian advisers adopt more sophisticated software aimed at achieving greater efficiencies and delivering greater transparency to their clients in the advice process,” Mr Resnik said.

“Our risk profiling system, for example, enables advisers to accurately assess their client’s risk tolerance in as little as 10 minutes. The test, and the automatically generated report, helps advisers better match investments to the needs of their clients. Our software, therefore, helps advisers meet regulatory obligations and, just as importantly, do a better job in delivering suitable financial advice.”

FinaMetrica has recently won several international awards for best ‘Risk Profiling Solution’ at the Wealth Briefing Awards. These awards recognise the best “technology solution to help wealth managers assess and document the risk appetite of clients.” FinaMetrica’s solution is used in 23 countries around the globe, in seven different languages.

“The effectiveness of our risk profiling solution explains its growing global appeal. Wealth managers and advisers are being forced both by market pressures and by regulators to become more transparent and prove their worth to clients. Our tools and materials help advisers to meet these demands and to entrench best practice in the financial advisory process,” said Mr Resnik.

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Andrea Slattery

The SMSF Professionals’ Association of Australia (SPAA) has thrown its weight behind the Federal Government’s decision to amend how best interest duty (BID) works as part of the FoFA reforms.

SPAA CEO Andrea Slattery says: “We support the amendments because the existing legislation had the potential to be too broad in its application, to create uncertainty and to cause a high compliance burden for financial advisors.

“Removing the BID catch-all provision will increase certainty and reduce costs for advisors, with these benefits flowing on to consumers of financial advice.

“SPAA does not agree with the criticism that the changes to the BID have inherently weakened how it works. In our opinion, the general requirement to act in the best interests of the client in relation to advice still remains.

“Further, and as highlighted by SPAA’s Patron, the former Chief Justice of the High Court, Sir Anthony Mason, at our 2014 National Conference, changing the legislative formulation of the best interest duty does not abrogate an advisor’s fiduciary duty at common law to act in the best interest of their client.”

Slattery says although SPAA welcomes the changes to reduce red tape, we believe that the Government’s amendments allowing an exemption for general advice from the ban on conflicted remuneration is still too generous, even though the Government tightened the exemption after consulting with the industry.

“We believe the best consumer outcomes are achieved independently from links with product remuneration that can incentivise the sale of products over the provision of objective, quality advice in the genuine interest of the client.

“The best approach, in our opinion, is an environment where an advisor’s remuneration is aligned with providing high quality advice without the influence of commissions.

“SPAA understands a key motivation of the Government’s amendments to remuneration of general advice was to increase access to general advice by lowering the cost of this advice.

“However, improved availability to general advice does not equate to consumers receiving financial advice that is appropriate, adequate or will assist them in making improved financial decisions.

“Research undertaken by SPAA has shown that personal advice tailored to consumers personal circumstances results in the consumer having increased engagement with their financial future and retirement savings and consumers are increasingly demanding specialised financial advice to assist them achieve their financial goals.”

SPAA stresses that the FoFA reforms do not address the competencies of those providing financial advice. ”We believe raising the standards of education, training and competencies for financial advisers is still integral to improving the quality of financial advice and improving outcomes for consumers,” she says.

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Mark Rantall

The Financial Planning Association of Australia (FPA) has encouraged Australia’s professional financial planning community to seize the opportunity handed to it by Assistant Treasurer Arthur Sinodinos and rise above the noise of tired, product-centric arguments in the first weeks of the amended Future of Financial Advice (FoFA) reforms.

The Government announced key FoFA amendments, welcomed by the FPA, on December 20 2013.

“We have seen a predictable reaction to these amendments from sectors of the superannuation product industry, using fear and misinformation to once again depict financial planners in a negative light,” said FPA CEO, Mark Rantall.

“Our position on these regulatory matters is quite clear: consumer protection laws remain intact and at world’s best standard. Combined with this robust legal foundation, professional financial planners who have individually subscribed to a binding code of professional practice not only have nothing to fear, they have everything to gain in this new environment.”

Mr Rantall said this message, together with the benefits of attaining the advice of professional financial planning members of the FPA, forms a key part of the FPA’s message to all Australians during 2014.

“It’s called a professional dividend, and it works for those who deliver professional advice and the clients who receive it. We seek to remind all consumers that the FPA is Australia’s first choice for professional members who deliver high-quality, consumer protected financial advice. In other words, we are differentiated by our professional dividend.

“We also want to place on the record the simple fact that our profession operates in a world-leading environment governed by robust consumer protection laws and an unrivalled voluntary Professional Code of Practice that has its number one principle of acting in the client’s best interest.

“Where others stand for product, the FPA and its members stand for advice, and advice outcomes that make a lasting positive difference in the lives of all Australians. We make no judgement on those who represent their case on the basis of their product ambitions,” Mr Rantall said.

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The inaugural SLICE financial planning survey has revealed that only 9% of respondents thought that the introduction of FOFA has negatively impacted on their business growth in terms of staffing and while 25% were unclear of the ramifications of the legislation in follow up discussions most suspected there would be some increase in costs to their businesses but they thought that this will have little or no impact on employee numbers.

25% of respondents expect FOFA to have a positive effect, leading to more employees in their businesses. Others commented that although complying with FOFA requirements will not lead to them hiring more employees, it has meant more work for the existing employees.

14% who responded ‘Other’ focused on the increase in workload within their businesses due to the implementation of FOFA but most indicated that they are looking for this to be undertaken by existing staff. It was thought that this increase while resulting in some cost to their businesses shouldn’t impact on employee numbers. However, one respondent made the comment that ‘costs will increase and productivity will decline’.

In follow up discussions with a number of respondents it was found that those who thought there was no impact or the impact was marginal all had put in place measures to meet the requirements of the legislation well in advance of its enactment. As one business owner said “The industry has had more than adequate time to get ready for FOFA and those that are struggling now should have taken the necessary steps to get their businesses ready”.

Employee numbers

68% of financial planning businesses either maintained or decreased employee numbers in 2013 while 32% increased their headcount. Of those businesses that recruited employees 35% were for replacement positions while 29% were for new positions as a direct result of business growth.

The new positions included traditional financial planning roles plus marketers, business coaches, accountants and lawyers. One business owner commented that although FOFA had little impact in terms of workload, they will be increasing employee numbers due to increased business, including bringing some work they outsourced during the GFC back in house.

Recruitment methods

When it comes to recruiting employees, the overwhelming number of respondents (70%) DIY while 13% use specialist recruiters who have a track record of recruiting for financial planning businesses. 8% draw on an HR resource and 5% on their licensee for support.

Cost was cited as a significant issue with recruiter’s fees being seen as prohibitive. However when asked how much time they had to allocate to the DIY process and the costs associated with that none had costed their time and the cost of the business’s resources in the recruitment process.

As one respondent said “Recruiting staff is something I have to do but I’ve found it frustrating. I start out talking to colleagues and if they don’t have any leads I advertise on SEEK but quite often you get a lot of people applying who haven’t the experience or the skills”.

55% of respondents will call on industry colleagues for leads while 54% use employment websites. 18% draw on social media in their recruitment campaign. When asked how they use social media in follow up discussions most said that they mainly use LinkedIn and to a lesser extent Facebook and that was mainly to check out candidates they were considering rather than sourcing them from these websites.

Financial planners are also becoming more creative in their efforts to find good candidates, including advertising on university websites, working with local high schools and university career services and acting as mentors in formal mentoring programs.

Employee screening

Most financial planners (79%) said they always conduct reference checks. When asked in follow up conversations what kind of checks they conducted 65% said that they conducted a formal reference check with a list of prepared questions with the remainder saying they did informal checks with no or few prepared questions. All said that they always spoke to the previous employer and sixty per cent spoke to the manager that the employee reported directly to.

One respondent commented “I always carry out two reference checks and make sure that I speak to the people that the person reported to as then you know they have had a lot to do with them on a day to day basis and can give you a an accurate view as to their capabilities and performance in their previous roles”.

58% of respondents used behavioural profiling however it depended on the nature of the position in terms of role responsibilities and seniority. 21% always used profiling. One respondent commented “I had a situation where I had two great candidates for a client service role and so I used a profiling assessment. It made the decision so much easier to assess how each would not only be suitable for the role but fit in to our team”.

64% of respondents stated that they didn’t use IQ tests with 27% saying they do but not always and 9% said they always use them.

Knowledge based tests were used by 81% per cent of respondents with 20% stating that they always use them.

Training

When asked about their training budgets 50% said that they had in 2013 increased their budgets while 34% reported no change and thirteen per cent had reduced their budget.

When asked in follow up conversations where the increases were targeted respondents said it was focused on up skilling employees in the use of the client service and administration functions and resourcing compliance.

One respondent commented “Training is an investment in our business. If we aren’t up to scratch on how we service our clients then we’re not doing our jobs. It is also important for our staff to know that we are interested in them getting the most out of their jobs and they are equipped to deliver excellent service to our clients. We run a staff satisfaction survey and every time it comes back with a strong endorsement of staff of our training programs.”

Concluding remarks

Controlling business costs and having a competent team in place were recurring themes that ran through the SLICE Survey.

While there was concern expressed in both the Survey and follow up discussions about an increase (or anticipated increase) in costs with the implementation of FOFA, a significant proportion of respondents stated that they would be able to absorb the workload through their existing staff rather than recruit new employees.

Recruitment was the second area of concern with most businesses preferring to DIY and found going it alone a ‘hit and miss’ experience. However, no one who chose this route had worked out what it cost their business in terms of their time or that of their staff.

Even in this cost sensitive environment there was recognition by businesses that they are reliant on their staff to deliver client outcomes and ensure they are fulfilling their requirements under FOFA and the reported increase in training budgets is a reflection of this.

Respondents to the SLICE survey

71% of respondents are in businesses that have been operating for more than ten years with 11% operating for six to ten years.

77% of respondents are in businesses with up to ten employees with 23% having between six to ten employees and 54% having between one to five employees. 16% of those surveyed were from businesses with more than twenty employees.

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Technology; a key consideration when considering strategic planning: FSC-DST CEO 2013 Suvery

Nearly all CEOs (96%) in a recent survey believe technology is a key consideration when conducting strategic planning and an overwhelming majority (80%) believe technology plays a major role in innovation and delivering new financial products.

These are the findings of the 13th annual FSC‐DST CEO Survey based on the views of 55 leading CEOs in Australia’s financial services industry. This year’s survey focused on the sentiment of Australia’s leaders towards doing business with Asia.

When looking at the role of technology in exporting to Asia, 55% of CEOs agree that online services and innovation are important in developing financial products for the Asian market. A similar number agree that it is important to continually invest in technology to take advantage of growth in Asia.

“Today’s dynamic marketplace demands that financial services providers place emphasis on technologically advanced feature‐rich solutions that can operate real‐time across jurisdictions and reduce operational risks,” said DST Bluedoor Executive Director, Martin Spedding. “Australian financial services firms can gain efficiencies by exporting technology infrastructure into Asia and the global marketplace to help expand their footprint and leverage a single operating model across markets.”

Among those CEOs currently undertaking strategic‐based IT projects, the survey found that a key focus is on back-end systems technology to support new product development, and customer interface systems, such as mobile app projects, that keep clients informed about investment performance.

Several CEOs noted that the financial services sector needs to match the developments in the banking sector in terms of using mobile technology applications to better communicate and interact with customers. The report found that 56% of CEOs agree that having a mobile‐based customer service strategy is important to capitalise on Asian growth.

“A big driver of change for the industry is the rapid adoption of technology by consumers, including tablets and smart phones,” said Spedding. “This evolution will have a significant impact on the Asian financial services sector as it becomes increasingly focused on selling direct to consumers.”

On a local front, most CEOs expect their IT budgets to increase over the next two years driven by a desire to achieve productivity gains in order to stay competitive and to meet new regulatory demands. The report found that CEOs expect the level of IT investment to increase under FoFA and SuperStream reforms.

“The demand for better risk and compliance management along with the need to be more productive and transparent is placing pressure on systems. Since many industry participants are under‐invested in technology, it’s not surprising that budgets are expected to increase,” Mr Spedding said.

John Brogden, CEO of the Financial Services Council said: “Improved technologies and innovation will help the financial services industry to operate more efficiently and to meet complex regulatory changes encompassed by the Stronger Super and FoFA reforms”.

“The financial services industry has a major opportunity to harness new technology to develop leading services and products that will give it a competitive edge for its next growth phase.”

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FoFA seen as an opportunity for positive evolution

Seaview Consulting Directors Bob Neill and David Fotheringham are of the opinion that contrary to much of the angst amongst dealer groups and advisers, FoFA is in reality a catalyst for long term business transformation that will actually improve operational efficiency and customer service.

According to Neill and Fotheringham, practice owners are falling into one of two distinct groups – the first regards FoFA as an opportunity and are utilising the changes to review all their activities and implement strategies to build long term, sustainable and ‘leverageable’ businesses of the future.

The second group are addressing how best to meet the regulatory requirements forced upon them and generally making the appropriate adjustments required to meet the minimum of those obligations. Seaview Consulting is of the view that the next 5 years are going to reward the advice ’innovators’ – those who acknowledge that the models of the past are not the solutions for the future.

“The one certainty in what is a rapidly changing financial services landscape is that business is going to get more challenging and more competitive for the participants and those that adapt to meet the change will have greater prospects of success,” said Bob Neill.

For those financial services businesses with growth aspirations Seaview Consulting maintains that they will be faced with three choices to achieve their goals:

• More from More,
• More from the Same, or
• More from Less

Historically businesses seeking to expand focus on building value through the generation of more revenue and putting in place the resources to manage the activity created. David Fotheringham added, “Traditionally 75% of the costs in an advice business are staff related expenses, and consequently as the needs grew so did staffing levels, i.e. the More from More approach.”

“These resources incurred large initial costs and utilisation grew until the business hit the next ‘step’ again requiring further investment and so the cycle repeated. The business constantly collides against the glass ceiling.”

Efficiency (More from the Same) is an approach which looks to create more from the resources that the business has available to it by working smarter, adopting more efficient practices and utilising technology better.

Effectiveness (More from Less) is an approach which looks to bring innovation to the business and change the nature of some of the things it does.

Opportunities exist in all businesses to take advantage of efficiency gains, and it is important to note that a dollar of expense saved is far more valuable than a dollar of revenue gained as the saved dollar goes to the bottom line whilst only the margin from the dollar earned makes it there! While there is a limit to the amount a business can save, the journey to implement savings results in efficiencies and savings that can be re-invested into larger more innovative change.

The gains from efficiency are incremental but cumulative and the benefit to the business is the ability to increase capacity and to stretch the glass ceiling higher whilst creating more profit and more value.

David Fotheringham said, “Innovation will be rewarded but the real challenge for business is to look at the cost of implementing change as an investment and not an expense, focus on identifying ways to be more effective and to commit to making the required changes. There exists today opportunities to utilise support such as outsourced solutions, technology interfaces and alternate communication mediums in redefining how owners conduct their business.”

“The willingness to embrace change and at times radical change may well be the catalyst that transforms the business in the new paradigm and delivers significant out performance in a new environment. Achieving change requires business owners to acknowledge the need to seek and utilise experts in communications, marketing, technology, process design and other specialist disciplines.

Managing experts and continuing to maintain a client focus requires faith in their own ability to generate new business and the skills of the expert.”

In order to obtain More from Less through improved effectiveness, radical change and business transformation is necessary, this will only be achieved by business owners displaying real courage to address challenges that may well require – halving the client base; integrating some direct channels to their offering, changing the service proposition; and so on.

Bob Neill concluded, “Initially, we expect only a small number of financial services businesses will take advantage of the opportunity FoFA will provide to implement lasting business change and transformation.”

“Ultimately, the willingness and commitment to embrace the effort involved in implementing the necessary changes will be paramount to utilising FoFA as the catalyst for business transformation and long term business viability and success.

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Amongst these advice businesses are the vast majority of Australian institutional wealth businesses, along with many high profile boutiques, independent AFSLs and a large number of independent financial advisers.

Tizzy Vigilante, IRESS Executive General Manager of Wealth Management, says clients looked to IRESS as a scaled strategic partner for an effective, efficient and timely way to fulfill their new obligations.
“We are delighted to have risen to meet this challenge with many clients going live with XPLAN-­‐CommPay over the past weeks, ahead of the FoFA effective date of 1 July.”

The FDS solution has been one of the most sought after features of IRESS’ FoFA deliveries over the past 12 to 18 months, Ms Vigilante says. “Wealth businesses like the fact that the FDS can be tailored to suit their specific business requirements while maintaining effective oversight of their obligations.

“XPLAN-­‐CommPay is fully integrated within the XPLAN platform, enabling the adviser to combine client revenue data with service delivery and other customer relationship data, to facilitate the very efficient generation of fee disclosure statements,” she says. Ms Vigilante said that the IRESS team has been focused on delivering the best solution available while meeting delivery commitments across many concurrent client projects.

“We are continually investing in research and development, but the IRESS team pulled out all stops to ensure our clients were prepared for what is the most significant change to the regulatory environment advice businesses have seen,” she says. “We anticipate that the integrated XPLAN-­‐CommPay solution now available to all these users will mean we have made the FDS demands far more efficient and manageable.”

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Mark Rantall

With the Future of the Financial Advice (FoFA) reforms kicking off today, the Financial Planning Association (FPA) members have been at the forefront of preparations for the implementation of the new legislations.

Member feedback from Bulletproof Financial Planning, an FPA initiative to support members in the lead up to the FoFA and through the reforms, has highlighted satisfaction with the FoFA campaign with record numbers attending events held regionally and online.

The Bulletproof Financial Planning initiative comprised of three elements:

• Webinar series attended by over 3,200 planners
• Over 1,800 registrations to 36 regional roadshows
• Over 11,000 views of the online toolkit

Mark Rantall, CEO of the FPA said: “The FPA launched the ‘Bulletproof Financial Planning’ campaign in response to research showing that over half of financial planners cited FoFA compliance as a main challenge. We believe, from the overwhelming attendance figures and positive feedback we have received from members, our members are in good shape to comply with their obligations under the FoFA reforms.

“ASIC has previously announced that they will take a facilitative approach towards compliance with FoFA for those planners making a genuine attempt to comply. We encourage members to continue to use the resources available to enable themselves to continue to provide best practice advice to their clients under the new FoFA regulations.

“With any changes to a profession, difficulties will occur, however we will continue to support our members through this important time. We also look to the Inaugural Professionals Congress on 17 and 18 October as an opportunity for the FPA community to have peer to peer discussions about any obstacles that may arise in this transition year,” concluded Rantall.

FPA members have been transitioning to Fee for Service since 2009 and made the move at the end of 2012. The FPA also announced over two years ago that new practitioner membership would be restricted in future to those that hold, as a minimum, an approved University degree.

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Alex Wise

With the Future of Financial Advice (FoFA) kick-off date of 1 July looming, specialist investment management group Select Asset Management Limited (Select) has urged Australian financial advice firms to have a hard look at underlying investment structures used to manage client portfolios.

“A prevailing sentiment is that FoFA has been a hard slog, with little business upside for planners beyond the implementation date,” said Select Fund Services Head Alex Wise.

“But our experience with a number of financial advice firms is that FoFA has provided a catalyst for positive benefits, beginning with managing the key issues of business risk,” he said.

Mr Wise said that while many financial advice firms are still wrestling with conflicted remuneration and the best interest tests introduced by FoFA, others are seeing operational efficiencies and investment benefits deriving from their solutions.

“Financial advice firms that have found solutions to their FoFA compliance issues are also discovering significant efficiencies and FoFA compliance benefits in operating multi-asset portfolios through regulated unit trust schemes,” he said.

“On the investment side, customised portfolios in a fund structure provide unlimited access to diverse Australian and global investment managers and can invest globally incorporating risk reduction techniques such as foreign currency hedging very efficiently. These unique portfolio construction characteristics have proven beneficial in current markets.”

“Additionally, structuring customised portfolios in this manner has increasing relevance in meeting the best interest test and avoiding the conflicted remuneration obligations under FoFA.”

Recent examples include portfolios operated by Select Fund Services investing in offshore structures that effectively provide insurance in the event of market volatility.

“Select has provided funds with tail-risk hedging that is not easily available through wrap or MDA accounts. One example would be a Japanese focused fund that has provided significant out-performance as Japanese government bond yields have spiked.” said Mr Wise.

Mr Wise said the use of such an approach builds a robust underpinning in the core operational areas of risk, secure custodial arrangements and professionally managed portfolio construction services.

Select Fund Services provides responsible entity (RE) services to numerous dealer group clients. This service enables licensees to focus on investment management and advice – giving Select Fund Services the job of compliance, governance and fund administration.

“Select Fund Services operates 20 funds as RE and trustee for multiple clients. Our systems and processes are tailored to provide fiduciary oversight to multi-asset portfolios.”

In addition to pure governance and compliance functions, Select Fund Services also delivers services to multi-asset unit trust structures. “Select has significant experience in drafting product disclosure statements for these types of portfolios and can also provide expertise to assist with important marketing documents.” said Mr Wise.

Multi-asset managers using a unitised registered scheme also gain the benefit of investor protection mechanisms such as an independent custodian and auditor. “Select has hand-picked tier 1 providers such as Ernst & Young for audit, Baker McKenzie for legal advice and BNP Paribas for the custodial function. This completes a fully institutional offering for our customised portfolio clients”.

Additionally, non-aligned dealer groups and planners have also found a significant operational burden in rebalancing fund investments ‘off-wrap’. This particular challenge has been met by Select Fund Services to engineer an easy outcome.

ASIC’s recent consultation paper on risk management CP204 indicates higher regulatory oversight for the way RE’s address business risk. Coupled with increased scrutiny of MDA operators and their capital adequacy, this has made it difficult for some firms to establish schemes internally.

“From a compliance perspective we also run significant risk management overlays, this clearly being the way ASIC would like RE’s to go and we are ahead of the curve on this,” Mr Wise said.

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