Advisers increase platform use but lean on fewer strategies

Padua Solutions co-founder and co-chief executive, Anne-Marie Esler, said following the exit of banks and large financial institutions from the financial advice space, advisers have more freedom to recommend a larger variety of super, pension, and investment-based platforms.

“Industry super funds in particular are becoming more adviser-friendly by allowing advice fees to be deducted from a client’s super balance and, therefore, they are increasingly being recommended,” Ms Esler said.

“Although they are restricted somewhat by their licensee’s approved product list, advisers are taking advantage of the thousands of platforms available in the market and, according to our data, recommending more than what they would have previously.

“Advisers are seeking the most appropriate platform that suits the needs of their individual clients and not recommending platforms based on a financial or other benefit, as they have been accused of doing in past years.”

Despite the growing use of platforms, Ms Esler said that of the 650-plus strategies that are available to advisers, they are restricting recommendations to more familiar, known strategies.

“Without access to technology and data systems, advisers cannot possibly be abreast of all the advice strategies available or be able to link to a client’s demographic profile to check eligibility,” Ms Esler said.

“Smart use of technology to develop advice strategies will ensure advisers can provide tailored, cost-effective advice for the benefit of their clients.

“With a recent ASIC report indicating more than 10 million Australians would like to receive financial advice in the future, advisers have a good opportunity to capitalise on this strong level of demand but the ability to access the appropriate data will be key.”

Padua Solutions said that according to its data, ‘rollover your super’ is the most recommended strategy used by financial advisers, followed by ‘retain your super’ strategies that recommend insurances; ‘review your estate planning arrangements’; ‘commence an account-based pension’; and ‘review your Centrelink entitlements’.

Strategies that recommend rolling over your pension or retaining your pension are the next-most popular adviser recommendations.

The fintech added that recommendations to commence an SMSF have plateaued in recent years but are more highly recommended by financial advice firms with a connection to an accounting entity, generally due to a joint ownership structure.

Investment Trends’ 2022 Adviser Technology Needs report released last year found the average number of platforms used by advisers has reached a 10-year high.

“While the longer-term trend in net inflows is promising, the competition for adviser relationships is fierce in an already tightly contested platform space,” Investment Trends research director Dougal Guild said at the time.

“It’s not surprising to see the increased average of the number of platforms used hitting a 10-year high given the prioritisation of efficiency and reliability by advisers now more than ever.”