Insights From Australia

As a reminder, Transact founder Mike Howard was one of those at the forefront of the Australian platform market before he saw the opportunity to export the model to the UK in 1999! Tom Dunbar our Chief Development Officer met with some Australian platforms and advisers on his recent trip to see our software developers in Melbourne. Tom shares his findings on the Australian advice and platform market below.

“The Australian equivalent of auto-enrolment was introduced earlier than in the UK, in 1992, with fewer opt outs and higher contribution rates, so average Australian retirement savings are higher than the UK. In December 2017 a Royal Commission (RC) into misconduct in financial services was established. The outcomes from this review fundamentally re-shaped the Australian advice and platform markets. Most of the big banks exited advice, and a smaller more independent adviser market now remains with ~12,000 advisers (compared to ~28,500 advisers in the UK). Some life insurer owned advice remains (a bit like SJP) but these advisers must now select platforms from across the market. The biggest RC change was mandatory explicit fixed fees (not basis points) for advice and an annual client confirmation that they are willing to pay these advice fees. The regulator has asked platforms to ‘police’ this annual client confirmation before facilitating adviser fees. The remediation work for clients who were charged fees without an annual client review was extensive. Estimates of remediation costs per customer are approximately 5 times the £426m provision made by SJP in the UK.

From an investment perspective, the growth in discretionary management (called managed accounts) is comparable to the UK. One Australian platform explained that managed accounts are ~20% of assets but closer to ~50% of gross platform flows – very similar to DIM stats on Transact. The managed account (DIM) market is less transparent in Australia with a single investment fee for DIM services and investment costs. This fee can pay rebates to platforms and adviser groups. From a platform perspective, before the RC, the market was dominated by insurer and bank-owned platforms. In the new world two independent platforms running in-house technology (like Transact) now dominate net flow. These platforms have operated in Australia for many years but recently benefited from a more independent adviser market. Like Transact in the UK, these independent platforms are focused on making financial planning easier and priorities include digitalisation and integration with the wider adviser ecosystem. The dominant back-office system in Australia is Xplan with comparable market share to intelliflo in the UK. Like in the UK, some advisers are adopting specialist native app client portals for secure communications, consent and digital data capture. Overall, UK advisers and platforms are on balance slightly ahead of their Australian peers on their digitalisation and integration journeys.”

If you would like more information, please contact Tom at tdunbar@integrafin.co.uk

1. Introduction
2. TOL Recent Enhancements 
3. Non-advised Clients Need Advice
4. Removal of Adviser Purchase Related (Initial and Switch) Fees
5. New Sustainability Disclosure Requirements
6. Insights From Australia
7. Transact – BlackRock MPS
8. The Increasing Popularity Of The Investment Bond
9. Transitional Tax-Free Amount Certificates
10. Interest on Cash
11. Transact Events 2024