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Regulatory burden hits platform expenditure

Investment platform providers are still spending significant portions of their product development budgets on compliance, new research from Investment Trends has found.


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The December 2014 Platform Report reveals that 12 platform providers spent a collective $173 million on developing mechanisms to comply with new regulations in 2014, with an increase in compliance spend on the rise year-on-year.

“Regulatory compliance remains a huge burden for most platform providers, absorbing in total 55 per cent of the platform industry’s development spend in 2014, up from 51 per cent last year,” said Investment Trends senior analyst Recep Peker.

“This has hindered some platforms more than others and competition is now even more intense at the top end.”

Meanwhile, the average wrap, platform or master trust spent $5 million on “new functionality”, down 22 per cent from the $6.4 million reported in late 2013.

Those that did invest in new enhancements were rewarded with higher rankings in the report, with Colonial First State’s FirstWrap taking out top spot for the third year in a row.

“Competition has become very intense at the top end, but Colonial First State FirstWrap managed to retain its position as number one in the industry following another year of significant functionality enhancements,” Mr Peker said, listing the addition of separately managed account (SMA) functionality among other enhancements.

Netwealth was ranked second on the list, followed by Hub24 and Westpac/BT’s Asgard eWrap at number four and MLC’s Wrap & Navigator products taking out fifth place.

AMP Flexible Super was found to be the platform “making the greatest advances in functionality”, while Netwealth “took the awards for ‘Best Transaction Functionality’ and ‘Best Model Portfolio Functionality’,” the report reveals.

 

 

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