WealthO2 managing director Shannon Bernasconi told SMSF Adviser that the growing compliance burden in the advice industry, coupled with the continued growth of SMSFs, meant advisers were under pressure to grow margins in a practice that was often still reliant on manual data entry.
“Traditionally, a lot of advisers with SMSF books are really HIN-based to maintain legal ownership of investments by the SMSF which is important to the trustee,” Ms Bernasconi said.
“They will have a broker account and a cash account and sometimes a platform that they can trade managed funds through, and all those different processes for an SMSF adviser firm are often manual or labour-intensive.
“You can imagine the inefficiency of that when you are trying to take effect of something that’s going on in the market, going in line by line and generating records of advice one by one, taking weeks on end to chase it up, and by then the market has changed and you’re still chasing up something you recommended to do previously.”
While many clients were keen to maintain oversight of day-to-day trading as opposed to a managed account structure, there was an expectation that the adviser would keep on top of market movements and not burden the client with too much manual compliance, Ms Bernasconi said.
“When you are talking about fee-for-service advice, you’ve got to bring value to the table, and part of that is investment expertise or access and it’s also about the ability to react in the marketplace,” she said.
“These clients have jobs, they are trying to run their lives and they don’t have time to be thinking about their portfolio every day, so they are paying the adviser to achieve those objectives.”
Ms Bernasconi said WealthO2’s technology solution, which was primarily used by advisers with self-managed fund clients, allowed full automation of share trading, portfolio rebalancing and records of advice, and had grown by around $1 billion in funds under administration in the last year.
This automation allowed advisers to grow their SMSF client base without investing further in labour costs, she said.
“A couple of our groups have grown enormously, they’ve either purchased existing books or organically grown, and that’s because they don’t have to add staff,” Ms Bernasconi said.
