Matt Lawler and Colin Tate

The advice industry has the chance to get ahead of government by creating its own benchmarking tool similar to Your Future, Your Super according to AMP Advice chief executive Matt Lawler.

At the recent Professional Planner Researcher Forum Lawler argued this will allow the industry to have better oversight of the development of the regime.

“I’ve spoken to a few investment professionals [about YFYS] and they don’t like it,” Lawler said. “Being a purist, it creates short-termism and all the wrong thinking. The theme is right, but this is what happens when you let the government do it as opposed to us driving it.

“We could get ahead of the curve and create it ourselves as opposed to waiting for the government to do it and potentially not doing it right.”

Lawler said the seperately managed account market has a lot of practices building their own portfolios where there is no benchmarking.

“Nobody knows if what they’re doing is giving the client a better outcome. There’s a lot of opportunity in the retail advice sector for us and all the researchers to get together to create our own sets of benchmarks.”

With this smaller subset of SMA groups building their own portfolios, Lawler said he is worried about their margins “feathering their own pockets”.

“They’re not giving the right outcomes to the clients which is going to be another thing we need to deal with. The portfolio should stand on its own and perform without any margins in them other than paying for research to support the quality of the portfolio.”

Pressure on fees

In a subsequent session exploring the contentious issue of managed account fees, Lonsec chief investment officer Lukasz de Pourbaix said the whole industry has been dealing with on-going fee pressure and managed accounts is no exception.

Brent Bevan and Lukasz de Pourbaix

“We’ve seen it on the platform and investment side,” de Pourbaix said. “The conversation is varied. Some advisers are very conscious about the fee aspect because of their definition of best interest duty so that is an issue for them.

“At the other end of the spectrum there are advisers with a well-articulated value proposition and the fee discussion is less of a priority.”

MLC Asset Management head of investment consulting Brent Bevan said outsourcing portfolio management with managed accounts meant additional costs are being imposed.

“The easiest thing you can anchor yourself to with best interest duty is what you can quantify and that’s the cost. If I can prove cost is lower that goes a long way to meeting my best interest duty objectives.”