There is much talk about the impending demise of large bank-owned investment platforms. In recent years, at least one financial planning principal has put his thoughts on platforms into action and created a bespoke alternative.
Ian Bailey, director and co-founder, Bailey Roberts Group, holds a firm belief that clients need direct access to their portfolio to have a successful self managed super fund (SMSF).
“Because I was an engineer originally and was interested in computers and programming, I saw that IT would be a good solution to the problem,” he says.
Being based in the university town of Wollongong, Bailey also saw the opportunity to leverage young talent in building an alternative to proprietary systems.
Are wraps headed for extinction?
“Wraps are a dinosaur today,” Bailey says.
“What we’ve built is something like the Xero of accounting, but for SMSFs. If you think about it, you can take all the information in, if you can account for it all and manipulate that and figure out how to trade…then why do you need an expensive wrap platform?
To build the system, Baily Roberts Group employed the programming and technology nous of then university student Stuart Douglas, who Bailey describes as a maths genius.
Having looked at every product that was available, Bailey says they found no existing solution that matched his brief, so decided to build their own.
This was a six-year process, but he says they’ve now been using it successfully inside Bailey Roberts Group for five years.
“The great thing about our business is that not a dollar escapes our business. We built our own application and it works better than any platform in the marketplace, in my opinion.
“I think it’s the future business model. We have less staff, we don’t have to take commissions, we don’t have to charge clients for having four visits a year,” Bailey says.
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The system allows the group to reduce the amount of direct contact its advisers need to have with clients each year, with regular reports provided digitally giving them with much of the necessary information. However, Bailey emphasises higher levels of contact are still available for those clients who want it.
“How do you rebalance multiple portfolio systems quickly, how do you buy at a particular price…funds have to be audited, and funds might want all the source material,” Bailey says.
“Some of the solutions out now have custody involved. But we wanted our clients to own everything in their own name. That was very, very important, so that we have no custody.”
He says the business also decided a long time ago they would look after their clients investments by having direct knowledge of the assets they invest in – including having an eye on ethical considerations.
For this reason, Bailey Roberts Group took the somewhat unorthodox step of employing in-house investment researchers. With three analysts on board, Bailey says this comprises a big proportion of the business’s total expenditure, accounting for around 30 per cent of its total costs.
“Our platform stores all the research data. We’ve built all that in because we believe the clients want to see it too.
“A client can go to their portfolio, click on BHP for example, and they can read for a lifetime because there’s so much research there,” he says.
The research follows a combined approach comprising both quantitative and qualitative analysis.
