Adherence to strong core cultural values, good governance and complete transparency are all vital – both to secure the trust of clients, and to deliver on the employer’s covenant to provide progressive and rewarding opportunities to those working within his organisation.
Historically, many offshore distributors have engaged in opaque business practices, offering investors a meagre choice of options, typically with obscure pricing structures that benefited only the advisers.
But total expense ratios that demand double-digit returns for clients to break even just aren’t competitive in today’s financial marketplace.
This is where platforms, or wraps, have a role to play.
The platform/wrap industry was built upon the philosophy that total transparency is essential, given the often dismal outcomes delivered in the past.
Based on initial success in Australia and the UK, many argue these investment repositories represent the future of our profession, enabling advisers to reduce costs and increase revenue, while providing a holistic service proposition to clients.
In the international market – where different currency, tax, legal and regulatory environments present acute challenges – there seems to be a great deal of potential for distributors to transition their business and build real value.
Execution-only platforms can give providers direct access to clients, while advisory ones allow advisers to be more investment-led, making the selection of a tax wrapper secondary.
They allow trustees to discharge fiduciary duties more efficiently, and to manage assets more professionally. For clients, it means greater transparency in pricing for each element in the advice process.
But as long as many offshore providers and distributors continue to offer complicated structures and chase a profit motive, the advantages of platforms will not be realised. It is only a zealous commitment to the founding philosophy of transparency that will ultimately deliver the true benefits.
