Summary
Financial advisors are a key distribution network for retail investors in Australia. All investment product manufacturers need to understand the priorities and criteria advisors use to select their investment partners and platforms. As almost all advisors use a platform to manage their client assets under management, understanding why certain platforms are more favored than others is crucial to gaining market share.
Key Findings
- With the greater transparency in fees and investment product costs in the wake of the FoFA reforms, advisors are looking for the most cost-effective means to invest in products and securities. Advisors need to detail to their clients what goes into their own charges, and so will appreciate providers that make it easy to map out costs.
- Platforms are first and foremost ranked by the investment fund range they offer, with almost half of survey respondents listing this as an important feature in making a platform attractive. A platform seeking to strengthen its appeal to advisors should look to ensure that the selection of investment funds is competitive in comparison to other platforms, although many other features also figure prominently in terms of advisors' priorities.
- Most Australian financial advisors see growing their customer base as the primary challenge facing their industry over the next two years, with client retention a concern for more than half as well. Advisors are clearly worried about their ability to attract clients and will want providers that can help.
Synopsis
Verdict Financial's “Australian IFAs, Investment Managers and Platforms” analyzes the relationship Australian financial advisors have with their product and platform providers based on our 2015 IFA Survey. The brief details the current use of platforms and the service arrangements advisors are seeking from their product providers. In addition to exploring the current relationships advisors have, the brief looks at the best lines of attack for platforms looking to build their advisor network.
What else does this report offer?
- Insight into the business concerns of Australian financial advisors post-FoFA.
- An investigation of the main features advisors look for in their platforms.
- Market share of the leading platforms in use by Australian financial advisors.
- Advisor ranking of the best platform packages in the market.
- Key features that prompt switching among advisors.
- Key recommendations for product manufacturers in what they can do to better appeal to Australian advisors.
Reasons To Buy
- Understand key trends in the Australian advisor community's perception of product providers.
- Understand how advisors are evaluating their platforms.
- Target those features that advisors most value.
- Improve advisor retention by understanding the services advisors most want from product providers.
Table Of Contents
EXECUTIVE SUMMARY
Key findings
Critical success factors
IFAS ARE A KEY DISTRIBUTION CHANNEL
Retail distribution has long been a platform-focused channel in Australia
Assets invested via platforms rose to A$640.5bn in H2 2015
The bulk of retail wealth in Australia is ill-suited to investment via advisors or platforms
PLATFORMS REMAIN THE DOMINANT CHANNEL FOR ADVISORS
Platform features
Fund range is key but a well-rounded platform is also important
Advisors are focused on growth and will want providers that can help them achieve this
Platforms need to be aware that advisors are under enduring cost pressure
The majority of IFAs rely on multiple platforms
Platform alternatives are few and niche but increasingly sought after
The wealth arms of the Big Four dominate the top platforms by use
A gap between use and top ratings suggests some churn in the platform market is likely
PRODUCT PROVIDERS ARE REGULARLY BUT INFREQUENTLY REVIEWED
Advisors do not have the time to review providers more than quarterly or annually
Shortcomings in fund range and performance prompt platform reviews
Keeping charges competitive is key to improving IFA retention
ADVISORS ARE INCREASINGLY INTERESTED IN USING THIRD-PARTY ASSET MANAGERS
AUM under third-party managers is still a fraction of advisors' total client assets
Asset managers should position themselves as having strong specialist expertise
RELATIONSHIP MANAGEMENT IS KEY
Training is the key support service that advisors seek from platform providers
Keeping up-to-date is a constant challenge and obligation for advisors
Advisors need constant contact with their platform providers
Digital interaction with platforms has become the norm but direct contact is appreciated
APPENDIX
Abbreviations and acronyms
Definitions
Future of Financial Advice (FoFA) reforms
Independent financial advisors (IFAs)
Managed discretionary account (MDA)
Separately managed account
Methodology
Verdict Financial's 2015 IFA Survey
Bibliography
Further reading
About Verdict Financial
Disclaimer
List Of Tables
List Of Figures
Figure 1: Platforms have matured as a key source of AUM
Figure 2: The Australian retail savings and investment market is dominated by superannuation funds and deposits
Figure 3: Fund range is the top draw in a platform for personal financial advisors
Figure 4: Growth remains the top concern for financial advisors, finally eclipsing regulation
Figure 5: Advisors like platforms that pass on the savings of the wholesale products in the form of lower costs
Figure 6: Almost half of Australian advisors are operating more than one platform
Figure 7: Platforms from the Big Four dominate the market
Figure 8: Colonial First State has the most attractive platform package in the market
Figure 9: A third of financial advisors review their providers quarterly
Figure 10: Investment fund range and cash management accounts will prompt a platform review
Figure 11: Cheaper platforms motivate IFAs to consider switching providers
Figure 12: A majority of advisors are placing some of their client AUM with third-party investment managers
Figure 13: Client preference for specialist advice drives third-party asset management use
Figure 14: Advisors want their partners to help them up-skill in new products and regulations
Figure 15: Product providers should accommodate IFAs' need for regular communication
