White labels, volume bonuses and commissions need to be phased out if platforms are to evolve, an industry participant has said.
MLC & NAB Wealth executive general manager investment platforms, Michael Clancy, said adopting a fee-for-advice approach, introducing private labels and providing greater transparency are areas the platform industry needs to change if it is to progress.
"Commissions need to go, volume bonuses need to phase out, and white labelling needs to phase out," Clancy told delegates at the recent Wraps, Platforms and Masterfunds conference.
"They need to be replaced over time with fees for advice, they need to be replaced by private labels, and there needs to be greater transparency."
Clancy said Australia's platform industry has undergone an evolution in the last 20 years, though the challenge to be more efficient, functionally rich and more cost effective still exists.
"Having gone through a bit of a process with the ACCC [Australian Competition and Consumer Commission] of late around our bid for Axa [Asia Pacific], we've had cause to go back and review how our industry has evolved over the course of the last 10, 15, 20 years, and platforms have come a long way from the very basic things that they were," he said.
Clancy said one of the most important evolutions of the platform industry has been the cost of the system coming down over the years.
"The cost of the system will continue to come down for all players in the system," he said. "The government demands that costs will come down and they should."
"We, as an industry, are built on a foundation of superannuation guarantee contributions - which we should never forget.
"And if the government - whichever government we get - contemplates going from 9 per cent to 12 per cent superannuation, they need to see the efficiency dividend go back to the investor, not wholly into the pockets of advisers or dealer groups, or platforms or fund managers."
Clancy also predicted that in future platforms will be fully online and have much quicker turnaround times, with greater automated transaction between a platform, a fund manager and a custodian, and all the other participants.
