Major players in equities, cash and other debt instruments – notably large fund managers and major banks – are well positioned to aggressively move into the SMSF fund admin space currently dominated by accountants, according to Chris Lumby head of SMSF at BT.
He says recent manoeuvres by AMP, and AXA to acquire specialists in fund administration like Cavendish, and Multiport respectively is sufficient evidence of the consolidation that’s currently playing out in this space.
“I can see those dominant players in the investment layer wanting to offer a more holistic service to SMSFs,” says Lumby.
Given that equities and cash are the two single biggest asset classes for SMSFs, he expects to see further consolidation of the fund administrator market by large-scale institutions successfully operating in the platform space.
While many SMSFs will be attracted to the trusted name of a big-four bank or large institution, Lumby doesn’t expect them to eclipse the predominance of accountants in the fund administration space any time soon.
While the concentration of fund administration will be more tightly held than it is now, Lumby says it’s in the B to C space where demand for fund administration is likely to turn from accountants to institutions that can offer a truly one-stop shop.
Interestingly, new research by Plan For Life (Actuaries & Researchers) reveals that retail managers that have sold a combination of investment and administration services to SMSFs, now represents 8% of total SMSF assets – up 45% over the last three years.
The research points to growing competition between large-scale institutions (in this space) including AMP, BT, Commonwealth, MLC and Macquarie.
Other companies to have played a role in the provision of administration and investment services also include: OnePath, Mercer, and NetWealth.
“There has recently been a move to target some of the older Administration Service providers, and this may signal new developments in this key sector,” the Plan For Life research explains.
“There are substantial opportunities emerging for existing players and new entrants in this market.”
By: Mark Story