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Non-aligned platforms boost SMSF market share

Investment platforms are maintaining their share of the SMSF market, however, there has been a significant shift with institutional providers losing ground to those that are non-aligned, the latest analysis from Class has revealed.

The “September 2016 SMSF Benchmark Report” said slightly less than one in five SMSFs used platforms and that had remained relatively stable for the past two years.

However, the proportion of assets those funds held on platform had increased from 2014, from 55 per cent to 58 per cent, suggesting predictions of the imminent demise of platforms in the SMSF space are premature.

The report revealed the market share of different platform types had shifted significantly over the same period.

While all platforms increased the value of SMSF assets they held, most institutional platform providers lost ground compared to their non-aligned peers, particularly Praemium, Hub24 and netwealth.

The notable exception among the institutions was BT Financial Group (BTFG), which was able to build on its leading position, growing from 41 per cent to 46 per cent of all platform assets.

Excluding BTFG, institutional platforms’ share of platform assets dropped from 47 per cent to 40 per cent.

The report also highlighted that SMSFs that used platforms had an average fund balance of $1.4 million, making them somewhat larger than the industry average of $1.2 million.

Further, SMSFs that used a platform held less cash and direct property and almost three times the percentage of managed funds compared to non-platform SMSFs.

While the two categories of SMSFs had a similar direct exposure to shares, those that used platforms appeared to increasingly hold their equities off platform, such as through a broker.

“This report provides one of the most representative pictures of how SMSFs are using investment platforms and how that has changed over recent times,” Class chief executive Kevin Bungard said.

“The investment market is developing rapidly as competition intensifies, but so are the platforms, with the growth of managed account products, for example.

“Class has long recognised the importance to our clients of supporting platforms, such as through the implementation of live data feeds and the integration of platform product providers.”

The report was based on an analysis of 120,000 SMSFs.

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