When ING Australia (now ANZ Wealth/OnePath) acquired 76 per cent of platform Oasis Asset Management for $54 million in 2006, the financial advisers who supported and built the platform were outraged they didn’t benefit.
The deal, which valued the platform at $72 million, beefed up the coffers of private equity firm Pacific Equity Partners and Oasis’ principals.
But a new platform, which is about to hit the market, aims to financially reward its main users.
Newcomer to the administration market, Federal Alliance, claims its new low-cost platform is an Australian first, which will ultimately give mum and dad investors the opportunity to own a stake in the platform promoter.
According to the Federation Managed Accounts prospectus, a conversion event in approximately three years’ time will allow investors to buy up to 90 per cent of the platform promoter for an initial cost of $250 per share. The remaining 10 per cent will be owned by Federal Alliance’s key principals: John Morrison, Jan Morrison, Stephen Reed and Monty Grainger, and joint venture partner, Australian Unity.
Shareholders will be entitled to dividends, subject to a dividend pool being available and the financial position of the company.
The idea is that dividends will offset investors’ administration fees over a three-to-five year period, John Morrison, Federal Alliance director, said.
Federation Managed Accounts is a private-label platform built on Linear Asset Management’s technology and infrastructure, with NAB Asset Servicing as custodian. It will provide access to all ASX-listed stocks and selected international equities plus managed funds. The platform’s managed funds menu is being finalised.
Australian Unity chief executive David Bryant said Federation Managed Accounts was a competitive entrant at a time when complex record-keeping requirements made the use of platforms increasingly appealing for investors so long as the price was right.
The platform will charge 0.44 per cent on balances up to $250,000; 0.33 per cent up to $500,000; 0.12 per cent up to $1 million and 0.11 per cent up to $2 million. For portfolios above $2 million, the fee will be negotiable. Investors will also incur an account-keeping fee of $1.76 per week, a custody fee of 0.013 per cent, plus any transaction and investment management fees.
At first glance, the fees for Federation Managed Accounts appear to be “at the bottom of the range”, CoreData principal Andrew Inwood said.