The heads of independent dealer groups have spoken out against claims that the sector's forthcoming push for product innovation forms a conflict of interest, blaming the lack of innovation as their reason for constructing in-house unified managed accounts (UMAs).
"The reason we went down the track of building UMAs is because we think there are flaws in the market as it is," Fortnum Financial Advisers executive director Ray Miles said.
"There's no chance that the institutions are going to innovate so what we've got is what we've got. Unless someone innovates, the world stays as it is."
Miles made the comments as part of a panel discussion at the 'No More Practice' event in Sydney.
Platforms own assets incorrectly, are too highly priced, do not provide enough choice and are still too inefficient, Miles said.
"We couldn't get what we wanted: something that was completely customer focused at a very low cost."
He said the decision to launch its e-clipse UMA last year was to provide lower margins for clients.
"It wasn't because we were trying to go up or down the value chain."
"It's an edge for advisers in our practices in dealing with the markets they're in: self-managed super funds."
Pharos Financial Group managing director Mark Perry said it invested money into an IMA in 2006.
"We pushed managed accounts. Why were we pushing those? It reduces the cost for the consumer, it's more transparent and it's a better outcome for the client and the planner who's involved with them."
"If we don't push it, the institutions aren't going to, because they're sitting there with so much money invested in their propriety platforms."
Paragem managing director Ian Knox said it wasn't a case of institutions versus independents.
"Institutions have done an unbelievably good job since the introduction of the FSRA [Financial Services Reform Act]."
"They've brought in templates, systemisation and a whole range of things that are beneficial but in the administrative and platform market there has been no innovation for the last seven years; none whatsoever."
The market is "crying out" for innovation in the backdrop of consumers seeking lower costs and innovation in asset ownership, Knox said.
Miles agreed and said it was up to the independent sector to be the drivers of technology off changing client demands.
"If there's money being thrown around [to advisers by institutions], it's because the products have got too much fat in them."
"How do we fix that? Someone's got to innovate, someone's got to change and drive the future because it isn't going to come from the institutions."
He described putting term deposits on a platform as being the only significant change in the past 10 years.
