How small players and managed accounts have revolutionised the market

The investment platform landscape has never been more competitive, with the advocacy of advisers key to a market surging towards $1 trillion. While technology continues to shape both what we expect from platforms and the players dominating the market, one advancement in particular – managed accounts – has opened the door to a hungry new coterie of independent players.

The large institutional providers have been slow to incorporate the new technology and have stumbled on key offerings. While industry giant BT has taken its time rolling out a next generation platform, well-funded challengers such as Netwealth and Hub24 have staked their claim.

On Monday, BT responded to the competitive pressure with a contemporised pricing model. BT chief executive Brad Cooper describes the changes as a “pretty material reduction in price” and a result of “a lower cost of servicing”.

New BT Panorama customers will now be charged a flat 0.15 per cent across assets, capped at $1 million, plus a flat annual account fee of $540. They will receive discounts on BT Wrap and Asgard eWRAP platforms.

The move is clearly a reaction to market forces. The new structures bears more than a passing resemblance to Netwealth’s tiered fee system. Both allow clients to aggregate a number of accounts to take advantage of the $1 million cap.

BT chief executive Brad Cooper

As a result, the incumbent providers – like BT – are being forced to improve their offerings and cut their administration fees. For advisers, the platform war is a boon.

There is an inside joke in the industry that the new platform crews are twice as good at pitching their products as the old guard, but you can believe only half of what they say.

That may be, but the numbers are starting to do the talking for them.


During the wrap platform era, institutional providers dominated the platform market, aided by a licensee model designed to funnel aligned advisers into their respective products. Independent platform providers struggled to find a foothold. Their opportunity came with the emergence of managed accounts, which was predicated on new technology that superseded that of existing wraps.

Around 2015, Netwealth, Hub24, and Praemium started being touted as cutting-edge providers of the new technology everyone wanted.

Meanwhile, the old guard lagged. Westpac, whose BT Wrap platform led the market, sought to head off the insurgence with a reported $500 million investment in its Panorama platform, the flagbearer of its managed account offering. But Panorama was painfully slow to market. Its rollout took about three years – far too long for advisers clamouring to access managed account technology.

BT insists the long rollout was always on the cards and that there were no major delays. A representative says the launch date, March 2017, was “close to original expectations”. Regardless, the time it took in development helped the independent players get a foothold.

While BT is still the platform market leader, with almost $150 billion under administration, based on data from actuaries Strategic Insight, their upstart competitors wouldn’t have had as much oxygen if Panorama had been fully operational 18 months earlier.

Paragem chief executive Ian Knox says “the long delay in Panorama’s arrival slowed down practices that had previously been using a BT-based system; Netwealth and Hub24 were the two beneficiaries”.

Paragem chief executive Ian Knox

BT was probably surprised, Knox says, at how difficult it was to lift legacy systems onto the new platform, but this isn’t necessarily an indictment of the business.

“Being respectful to BT’s position, they were making a massive change within their business, and not just introducing a managed account with the intent of being quick to market,” he says.

Macquarie also found the transition to managed accounts problematic. Cameron Garrett, head of wealth product and technology at Macquarie Group, says the company has had “managed account capability for 17 years, almost as long as we’ve had the wrap platform”. Despite this, Garrett says, Macquarie’s managed account capability was “relatively nascent” as recently as 12 months ago.

Netwealth joint managing director Matt Heine says that while the incumbents were taking their time to look at what was evolving in the marketplace, the independents identified early on that managed accounts were a significant change. Heine says ‘ground zero’ for the insurgence was much earlier than 2015.

Netwealth joint managing director Matt Heine

“We found that around 2007, 2008, a lot of that structural change around the platform space seemed to stop for the incumbents, which gave the likes of us and other smaller players the opportunity to develop and evolve the platforms,” he explains.

Heine says the institutions stalled on managed accounts because they already had a captive audience of advisers aligned to their licensees.

“The incumbents have had tied distribution for the last 10 or 15 years,” he notes. “When you have three or four thousand advisers who have got very limited product choice, it’s not a great incentive to actually invest in your product, because you’ve effectively got guaranteed flows.”

Hub24 chief executive Andrew Alcock says there was “absolutely some inertia behind the delays”. While the incumbents tarried, the others innovated.

“The new players led change in the industry,” Alcock says. “Rather than adopting the technology, in many cases we created it. If we hadn’t done that, we’d still be back where we were a few years ago.”


While the platform battle has intensified in the last few years, the war has been raging since early master trusts began providing managed fund portfolio administration in the early 1980s.

Around the turn of the century, wrap accounts began their insurgence, offering not only enhanced administration and reporting but a broader range of investment options.

Wrap offerings separated themselves by letting investors hold underlying assets in their own name and giving them the freedom to transfer between platforms without sale. They introduced cash accounts for income and expenses, and separated fees and taxes for transparency. Trading was made easy for advisers, who quickly latched onto brands such as Macquarie Wrap, Asgard eWRAP and BT Wrap.

The third generation of platforms facilitated managed accounts. They enable processes that traditional wraps do not; model portfolios are leveraged to submit ensemble trades without the client’s prior knowledge, and investment decisions are largely brought under the banner of investment professionals who aren’t necessarily financial advisers.

Buoyed by 2014 Future of Financial Advice legislation that compelled advisers to place clients’ best interests at the forefront of their decisions, managed accounts have presented an undeniably effective platform that has revolutionised the way advisers manage money.

The efficiency of managed accounts affords planners more time to both interact with clients and serve a larger base of them. Clients win quality and advisers win quantity.

“Advisers who use managed accounts don’t spend their time on investment selection and administration,” Investment Trends research director Recep Peker says. “We’ve actually quantified it – the average planner saves up to 12.5 hours per working week by using managed accounts.”


The incumbents still heavily dominate the market. Behind BT’s $150 billion under administration, AMP’s stable of platforms total $143 billion and CBA-owned platforms watch over $120 billion.

Netwealth, the largest of the new guard, has $16 billion, so it is far from toppling the existing order; however, while BT’s bottom line for the year to March 2018 represents a 4.7 per cent annual growth rate, and AMP’s represents 5.5 per cent growth for the same period, Netwealth’s funds base grew by 48 per cent in that time.

“Netwealth, Hub24 and Panorama are amongst the most technologically advanced platforms on the market,” Peker says.

The data also skews towards the new players as far as adviser approval. The latest Investment Trends report shows the top three platforms for overall adviser satisfaction are Netwealth, CFS FirstChoice and Hub24. It is Netwealth’s seventh year in the top spot, and it also ranks No.1 for platform functionality, with HUB24 and OneVue behind it.

The satisfaction and functionality trends are important, Peker notes, because “the nature of platform businesses is that they’re not that sticky”. One-quarter of advisers stopped using at least one platform in the last 12 months, he says, and 94 per cent of planners say they would switch their current systems to access improved tools.


So what are advisers looking for in a platform? Peker says the essential element – or “hygiene factor” – is efficiency. A managed account platform provider must give an adviser a seamless user experience, with minimal friction on everything from basic trades and tax reporting to in-specie transfers and pension refreshes. Advisers are looking for their extra 12.5 hours, so efficiency is the qualifying offer.

Pricing matters, but it’s difficult to quantify, as providers generally negotiate rates with advice firms based on package offerings. Anecdotally, the rate ranges from 20 basis points to 110 basis points, depending on level of functionality.

Market forces are having their way. BT’s new pricing structure, announced on Monday, has taken the game back to the new players. The Westpac-owned wealth management business is using its significant scale to match the upstarts’ model, and the new pricing structure is straight out of the Netwealth playbook.

OneVue chief executive Connie Mckeage says pricing becomes more important as the technology becomes more available to everyone.

OneVue chief executive Connie Mckeage

“Most of the market entrants now have all the same features and functionality, so it comes down to the ability of a particular provider to be at the right price point,” Mckeage says, “because that’s your defensible position.”

AMP head of platform development John Keating agrees.

“Top of the list for planners and their clients is investment choice and competitive pricing,” Keating says.

Hub24’s Alcock takes a more futurist view, highlighting the need for open architecture and the ability to host other software, such as robo-advice applications or CRM tools, on the front end of platforms.

“People talk about price wars” he says, “but the debate needs to shift to best interests and whether you can help someone retire with one, two or three thousand more dollars in 20 years just by using different technology.”

Netwealth’s Heine says advisers are looking for the nice-to-haves, such as “electronic signatures, automated records of advice, the seamless integration with other tech providers and the ability to do more and more online, rather than send in heaps and heaps of paperwork”. Down the road, Heine believes blockchain and artificial intelligence will loom large.

Investment Trends’ Peker takes still another view. He says, the battle will be fought around client engagement tools.

“What will differentiate platforms is the whole client engagement piece and how you facilitate that,” Peker argues. “If you survey customers – those who intend to use a planner – 85 per cent of them expect online access.”

Peker explains that the top thing clients expect from online access is the ability to track goals, something that no platform currently provides.

“Planners are realising that they need to move from a proposition that’s centred around investments and returns to one around client goals,” he continues. “Advisers are saying, ‘OK, we’re doing your annual review and your portfolio is up 6 per cent’, and the client is left asking what that means and how it’s relevant to them. Platform providers need to be working out how they can better enable that client engagement piece.”


Institutional advice is fracturing. As of March, 7691 advisers were under licensees owned by AMP and the banks; 2783 of those are now with businesses that have been earmarked for sale or demerger.

The big end of town’s retreat from wealth management is set to continue, buoyed by the fallout from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. As advisers move away from the institutions, more will be free to use the platform of their choosing, which means the market will only become more open.

Thirdview Financial Planning, as a small, successful firm on the cusp of upgrading to a managed account platform, typifies the type of client platforms are trying to attract. Owner Peter Foley appreciates the comprehensive offerings big institutions provide, but is convinced the smaller, specialist players benefit from a more focused view.

Thirdview owner Peter Foley

“If the independent guys are thinking only about their business, and not funds or licences tied to distribution models, their focus is going to be on building a great platform that delivers what advisers want,” he says. “They’re a natural fit for me.”

Not all advisers are looking for independent providers, though. Many prefer the security and resources of established players over the new entrants. The institutions are keen to emphasise this. Dina Kotsopoulos, head of platform product management at BT, says it has “operational scale and rigour that smaller firms don’t have access to,” while AMP’s Keating says, “Large platforms, such as [AMP’s] North, are able to offer scale and efficiency that the smaller players can’t.”

Institutional platform providers are in a position of strength, and platform offerings from the likes of BT, AMP and Macquarie are examples of what big business technology can produce.

Yet cracks are starting to appear. The advice industry is moving in a direction contrary to their strengths, and they left the door open to the competition at exactly the wrong time.

In a world moving towards independence and agility, relying on scale won’t get the job done.

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