As the advice industry braces itself for reforms, custodians need to place more emphasis on strategic alignment with clients, according to Northern Trust.
Being able to show that they provide greater value to clients is crucial, the group said.
“My view is that given all the structural and market changes amongst our clients – financial and regulatory – they need better and faster data,” Northern Trust Australia managing director Rohan Singh told InvestorDaily.
“The future is now, but custodians need to carefully position ourselves in the data chain to the point where we are adding considerable value to the clients.”
Mr Singh said institutions are increasingly embracing risk management practices and data can assist in measuring market and exposure.
It is important that custodians build stronger relationships with clients in order to ensure they are working to achieve their client’s goals.
“Custodians need to find their place and strategically align with the clients to move away from these pure ‘vendor/client’ relationships,” Mr Singh said.
“The ability to allow our clients to make better informed investment decisions and to support real time investing is key.”
The Australian Securities and Investments Commission (ASIC) recently proposed regulations for the custodian industry, including specific ‘gatekeeper’ roles.
At the 2013 Investment Administration Conference, ASIC senior executive leader for investment managers and superannuation, Ged Fitzpatrick, said that the proposal was not a change to current custodian obligations.
Mr Singh, who sits on the board of the Australian Custodial Services Association, said he agreed with the view that the proposed regulations are not changes to custodians’ current role.
“ASIC are not necessarily trying to change the expectations; they just wanted to confirms that these are the expectations and that they are correct,” Mr Singh said.
“I don’t think the regulator is necessarily changing that, but the services can change from custodian to custodian, even though the legal restrictions and liabilities generally don’t change.”
