Exploring the link between innovation and investment governance

The relationship between governance and performance has been explored in-depth, contributing to the belief that long-term business and investment success requires prioritising ethical, sustainable, and responsible practices alongside financial performance.

Investment governance, which refers to the systems, policies and procedures used to inform investment decisions, is an essential part of good corporate governance for all investors, especially those advising and investing on behalf of others.

While it is more commonly associated with large institutional investors, like superannuation, pension and sovereign wealth funds, it is equally as critical in financial advice and wealth management.

Advice businesses and licensees are responsible for the advice they give, making robust investment governance frameworks essential for meeting the needs and expectations of all stakeholders including clients, employees and shareholders.

An obvious example of investment governance at play is approved product lists (APLs), which put guardrails around the financial products and platforms that advisers are authorised to recommend and advise on.

APLs demonstrate the layered nature of good governance. For Entireti’s licensee groups, building and managing an APL involves internal qualitative and quantitative research on hundreds of products and managers, inputs from external research houses and asset consultants, regular investment committee meetings, and ongoing monitoring and review.

Investment governance must be multi-faceted and practical to effectively protect clients and advisers, and deliver strong investment outcomes, says Sarah McCarthy, head of portfolio solutions within the Investment and Research Services division of Entireti.

“Robust governance is underpinned by multiple layers of protection,” she says.

“Like a house secured by several gates and locks, if one control fails, others continue to operate—no single layer can be relied upon in isolation.”

McCarthy has observed heightened regulatory focus on investment governance over the past decade.

“The regulators want to make sure that every player is doing the right thing to deliver consumer outcomes and, at the end of the day, that’s exactly what we’re trying to do too,” she says.

“Our advisers have the comfort of knowing that a lot of due diligence and work at every level is going on behind the scenes.”

“We are providing a practical framework for navigating investment choices to ensure advisers have defensible solutions. We’re also educating them about their obligations, supporting them to meet those obligations, and giving them confidence that they’re doing everything they should be.”   

Efficient implementation

According to John Carnevale, Entireti’s executive general manager for research and investment services, governance and innovation are increasingly enmeshed, citing the rise of managed accounts and industrial strength portfolio management systems as innovations that enable the efficient implementation of investment decisions and, in doing so, eliminates leakage and enhances investor outcomes.

With modern systems and technology, investors and advisers can track and analyse portfolios in real time, automate reporting and tax management, and create important alerts and reminders.

“Efficient portfolio management systems address some of the risks in traditional manual approaches, including slow reaction times to changing market conditions and timely investment opportunities, and things slipping through the cracks because clients are busy and often need to be chased up,” he says.

Carnevale leads Entireti’s investment research function and also oversees Salita Portfolio Services. 

Established in 2025, Salita Portfolio Services brings together Entireti’s investment capabilities, across Akumin, Fortnum and Personal Financial Services, and streamlines the implementation of investment advice.

The true test of innovation

According to McCarthy, the most valuable innovations improve people’s lives.

“For advisers, innovation should make it quicker and easier to deliver advice that is clear, consistent and defensible at scale,” she says.

“But advisers don’t just want support understanding investments and markets, and selecting suitable products, they want in-depth information about how portfolios are governed, monitored and implemented not just at a point in time but on an ongoing basis.”

“They want the confidence to do more for clients, advise on more areas, without compromising governance. Technology and data will play a critical role in helping them achieve that.”

While the government and industry is striving to make advice more accessible, affordable and scalable, Carnevale emphasises that good advice is not one size fits most.

“Advisers have diverse clients bases,” he says. “There are fee sensitive clients, clients who want access to private markets and clients that don’t like the Mag 7.”

“Businesses need a different service proposition for different cohorts. Advisers aren’t necessarily asking for new products and strategies, but rather better systems to understand and efficiently meet the needs of clients.”

In addition to customisation, there is strong demand for “governance-embedded solutions,” according to McCarthy.

“Advisers want solutions that have portfolio monitoring, oversight and documentation designed in,” she says.

“They want to know that portfolios are governed in an appropriate fashion and, if performance issues arise, swift and appropriate action is taken.”

This is an edited extract from the Professional Planner Investment Innovation Guide. Click here to read the full article.