Independently-owned dealer group GPS Wealth has slashed investment fees in half by implementing a Managed Discretionary Account (MDA) solution and turning its back on expensive master trusts and wrap platforms.
New clients of GPS Wealth pay an average investment management fee of between 0.6 and 0.8 per cent of assets under advice compared to fees of up to 1.5 per cent previously, according to GPS Wealth managing director, Grahame Evans.
The group also expects to transition around 60 per cent of existing funds under advice into a MDA structure over the next couple of years.
“The MDA is only for new money at this stage but we’ll be seriously considering the service for existing clients as part of the review process,” Evans said.
“Platforms and managed funds are still very expensive and inflexible, and our philosophy is to add value through asset allocation and by keeping fees down and preventing clients from making silly, emotional investment decisions.”
“The future of financial planning is one where investments are held in the investor’s name, costs are minimised by using passive investments where suitable and advisers better educate their clients about behavioural finance.”
Established in February 2012 by former PIS advisers, Greg Holman and Rob McGregor, GPS Wealth now has 32 practices and over 50 financial advisers across Queensland and New South Wales.
Evans, formerly general manager of PIS, joined the group last year. He said the managed account structure allowed the group to build tailored direct portfolios based on clients’ individual objectives and tax situation.
GPS Wealth signed a deal with specialist MDA operator, managedaccounts.com.au in May 2013, after a rigorous search. The group spent six months implementing the service, which involved establishing an investment committee, investment charter and a new risk management framework.
Evans said the MDA solution underpinned the group’s investment philosophy and mantra of “Exciting life, boring money”.
David Heather, chief executive of managedaccounts.com.au said legislative and structural changes to the financial planning industry were driving many advice businesses to find a more efficient investment and administration solution.
“A managed account solution can deliver many benefits to advice businesses, advisers and clients,” Mr Heather said.
“Advice businesses can centrally manage and implement direct portfolios that and advisers can focus on delivering portfolio solutions that meet their clients’ personal needs and objectives without the need to produce a Record of Advice for each change to the portfolio. There’s less administration and paperwork and more time in front of clients.”
About GPS Wealth
GPS Wealth is an independently-owned Australian Financial Services licence holder established by in 2012 former PIS advisers, Greg Holman and Rob McGregor. A key part of the group’s business model is its proprietary Pathway to Wealth program, which teaches financial advisers and accountants how to engage effectively with clients to deliver quality advice and develop profitable and successful referral partnerships. GPS Wealth has a referral relationship with over 45 accounting firms.
About managedaccounts.com.au
Established in 2004, managedaccounts.com.au is a specialist managed account provider. It creates, operates and administers bespoke managed account solutions for a growing number of Australia’s top financial advisers, dealer groups and fund managers.
Investment Administration Holdings, the holding company of managedaccounts.com.au, recently conducted a capital-raising and will list on the Australian Securities Exchange later this half.
managedaccounts.com.au was previously known as Investment Administration Services.
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