SPECIAL REPORT: Why more planners are going for brokers

He says that at the time, he saw an opportunity to transform the wholesale online broking services on offer. He also believed no one was providing a good end-to-end solution for advisers whose value proposition had been challenged by the GFC.

“We set out to provide a good, viable alternative to existing channels. The difference in the Core Equity Services offering is that it’s built for service, including the capability for data feeds, invoicing and a whole range of tools,” Steel says.”Most importantly, we have great people, a dedicated adviser desk and a world-class website with robust technology. We are able to provide guidance to planners on exactly what to buy and sell via our para-planner portfolio construction service, which helps them look good to their clients.

“We have the best research in the market and are focused on creating models that are more acceptable to advisers. The next step will be integrating those models to make them even easier to use as well as bringing out new services to improve the integration of information.”

Steel says while we’ve already seen a big flow out of managed funds, he will not be surprised if between 60 and 65 per cent of client inflows are directed to direct listed investments within the next 18 months.

“ETFs are going to become even more important for planners as a cost-effective and easy way to diversify their client portfolios,” he says.

“The challenge as the financial planning industry moves towards a fee-for-service model is for planners to figure out how to provide a good value proposition and attach the right fee structure.”

Online broker Bell Direct was first launched in November 2007 and in May 2008, Arnie Selvarajah was appointed CEO. Sporting a resumé that includes executive manager at CommSec and a role at Bankers Trust, where he was directly involved with the development and launch of BT Wrap, he says the aim was to create a new paradigm in online broking with a strong client focus.

“It’s a great way for planners to demonstrate value and allows for increased transparency”

Selvarajah says the Bell Direct website is easy to use and informative with several unique features, including multi-client trading, which allows a planner to place buy or sell orders for multiple clients at the same time.

“Although the orders are placed separately with the ASX, they are placed almost instantaneously. The feature enables a planner to get a number of clients in or out of a particular stock with the press of one button, relieving the pressure of execution,” he says.

“The functionality of the site makes it easy to find a client’s portfolio and instantly see any relevant news and announcements relating to that stock, giving the client the confidence [that] their adviser is on top of things.

“In terms of research and modelling, after my previous experience in development of a wrap, I didn’t want to create a closed model. Rather than dictating what the planner can do or where they can access research and portfolio modelling, we are focused on building links and integration with other sources of information.”

Bell Direct also has the facility for client trading, either alongside the planner in one account or in separate accounts, which can still be consolidated for reporting purposes.

“We’ve had a great response to this feature. It’s a great way for planners to demonstrate value and allows for increased transparency,” Selvarajah says.

Steel says that Core Equity Services expects to add a similar functionality by the mend of the year, but points out that not all planners will want their clients to be able to view or access their portfolios directly.

“Today, the whole model is in question and it’s important for planners to get a clean business model to begin with,” he says. “Some of the new features available via online brokers could in fact create challenges for planners if they’re not prepared for them.”