Platforms 2012

Will 2012 be the year of the next generation platforms?


As we all know, the retail platform business model is under pressure from:

• A large and growing self-directed investor segment which is using SMSFs as its preferred vehicle
• Rotation by planners away from managed funds to direct assets (including equities and term deposits)
• Improvements in technology which are allowing planners to rotate away from traditional platforms entirely; i.e Web Superfund or Managed Accounts linked to SMSF platform.

Those pressures are most evident at the top of the market, but they won't stop there. Already this is starting to erode traditional platforms’ and fund managers’ dominance of retail flows and assets, and ability to maintain pricing levels.

If you take a long term view of the evolution of the industry, the business model is in transition. The dominance of the existing model is fading, but the dominant new model is not yet clear. This environment is particularly difficult for big players, and favours insurgents and innovators. But it will pass, so hang in there.

Clearly there is a time for change, and for starters 2012 should see more new low-cost services offered directly.


Here’s why:

• The removal of embedded remuneration has leveled pricing between the planner and direct channels.
• SMSF's a niche segment but it controls a substantial percentage of super assets.

The problem is that SMSF's is a "cottage" industry, with no economies of scale to match the retail platforms.


While there are in excess of 400,000 ATO registered SMSF's, the top SMSF administrators hold less that 5,000 funds, many are run out of small accounting practices with less than a dozen funds.


Today SMSF's have in excess of $100 billion of listed equities and $80 billion of cash and deposits alone..


What is required is retail fund economies of scale, while at the same time meeting the mandatory SMSF specific compliance requirements..


Dealer groups, and Advisors, check out our Managed Account linked, Zero administration Web Superfund service, which is aimed at exactly this $180 billion market.


Charles Moore
CEO VillageMall Pty Ltd



Disclaimer The contents of this site should not be understood to be accounting, taxation or investment advice but rather as general product related educational information that may or may not meet your specific requirements.