Addressing the 13th annual Wraps, Platforms & Masterfunds conference in the Hunter Valley recently, Morningstar head of adviser services Andrew Whelan said that with a fee cutting war largely over, incorporating greater software and CRM functionality could be a way to bring overall costs down.
“The traditional value proposition of platforms is you want choice of funds, you want low costs and you also want efficiency for the adviser,” Mr Whelan said.
The “race to the bottom” in terms of fees has largely already happened, he said, and now platforms need to work out another way to broaden their value proposition to advisers.
“How are you, as a platform, helping [advisers] win and retain more clients?” Mr Whelan asked.
He pointed to US asset management consultant firm Kasina, which ranks websites that advisers use, based largely on content availability, content quality and the user experience.
Mr Whelan said Fidelity, Vanguard and BlackRock all appeared on Kasina’s top 10 list in 2011 and 2012. Aside from being asset managers, in the United States they are also called brokerage houses and massive distributors of not just their own funds but other managers’ – meaning there are significant parallels between their US services and platform providers in Australia, he explained.
“The one thing that slaps you in the face is the amount of strong adviser tools that are on these sites. So what they’re actually trying to do is claim a piece of the workspace and the adviser and claim a piece of the work flow and they’re all competing with each other to do that,” he said.
These tools compare characteristics for all product families, compare product disclosure statements across funds and do a cost simulation, and help an adviser win business as part of that review, Mr Whelan said.
“So now we’re in the world of best interest duties, how powerful would that be? Sitting on a website, sitting on a platform, all integrated with your information, you can create scenarios, hypothetical investments, you can build portfolios, [do retirement planning]… and it goes on.”
Platforms incorporating these other tools could be a way to bring prices down, Mr Whelan said.
“It’s pretty easy to predict that platforms have to go this way. This way, this is exactly where platforms have got to go because if nothing else, this is the number one wish of their clients,” he concluded.
