The flow of money into the Australian retail funds management industry is largely driven by the financial planning sector, and is also known as the ‘wealth management’ industry.
According to researcher DEXX&R there are currently 134 fund management firms within the Australian market, yet accounts for thousands of professionals.
While not all of those 134 managers have their own retail product, the majority have their investment option/s available on wrap or masterfund menus.
As at December 2014, total retail funds under management/administration (FUM/A) was $664 billion. Breaking this number down, $331 billion was in superannuation, $171 billion was in the retirement incomes sector and $162 billion was in retail non-super.
Each of the big four banks has a wealth management arm that ‘manufactures’ and distributes products via its financial planning networks.
For example, the Commonwealth Bank owns Colonial First State and Westpac owns BT Investment Management. The big wealth management companies also have distribution agreements in place with ‘non-aligned’ financial planning groups.
Along with the bank-owned funds managers, there are many stand-alone funds management firms that are vying for exposure to planning networks. This can usually be achieved by entering into an agreement with a financial planning dealer group to be included on their approved product list (APL).
Fund managers looking to increase their retail distribution are also keen to be added to popular investment platforms used by financial planning groups.