Financial planning investment platforms, including wraps and master trusts, are unlikely to be replaced by separately managed accounts (SMAs) as the dominant investment administration system, according to Asgard.
Despite the increasing number of dealer groups that are looking to adopt SMAs to facilitate a switch to fee-for-service advice and answer to the increased demand for direct investment services, platforms are the best vehicle to create cost efficiencies and make advice affordable for a broad client base.
"High net worth individuals represent less than 10 per cent of the population. That is not going to change any time soon," Asgard head Wayne Wilson said.
"Platforms are the most suitable system for the mass affluent market. New technologies are always a challenge to a business that has a dominant position, but platforms are designed to do highly leverable administration," he said.
Recently, financial planning companies including Paradigm Wealth Management and Snowball Group have looked at the potential of SMA-type systems becoming their main form of investment infrastructure for the future.
Wilson did acknowledge there had been an increased demand for SMA-type structures, but said this demand could be met by expanding existing platform systems rather than replacing platforms.
Asgard is in the middle of a $50 million overhaul of its systems that aims to better integrate its Element, Ewrap and Master Trust systems following the merger between Westpac and St George.
As part of this three-year process Asgard will look to improve its direct investment services, which will include providing a modelling service that is similar to SMAs but that has different taxation implications, Wilson said.
"We will also look at SMAs, but that won't be until the end of the three-year project," Wilson said.
