One of the positive outcomes from the Royal Commission is the cost of managing investments. The cost of investing in superannuation, or other investment vehicles, is coming down.
As an allocator of client capital, if I can find an investment solution that is cheaper, but retains all other positive attributes, such as performance and service, then I’ll make a recommendation.
Products manufactured by the financial institutions, such as platforms, masters trusts and wrap accounts, are being recalibrated and redesigned for lower fees and (in some cases) a better service, in order to maintain revenues. From the 1st of June this year their administration fees have started to drop. With bank financial planners now set adrift, and looking for a new home, the banks are cognisant that their conflicted distribution channels have disappeared or will imminently. They are acutely aware of the need to become better product manufacturers to meet the consumer’s demands and interests.
Some of the largest retail platforms in the country are now much cheaper than the industry funds.
There are new platform providers, also entering the financial market, that are not institutionally aligned, offering investors and advisers even greater choice and ensuring a removal of conflicts of interest between primary and secondary market participants.
There are more index funds coming onto the market and becoming more widely available. Index funds are low-cost, packaged investments that will seek to give the investor an exposure to a region or a theme, replicating an index such as the ASX200 or US S&P500.
These pricing developments will, in the medium to long term, give new investors greater choice in tailoring their portfolios, whether they are $20,000, $200,000 or $2 million.
Please note there are risks with investment opportunity. While it sounds easy, it can be difficult to find the right investment that suits your needs and objectives. Sometimes a low-cost investment can lead to adverse outcomes (“you get what you pay for” as the saying goes). Capital Gains Tax (CGT) and income tax are other factors that investors may need to consider or calculate properly when changing between investments, platforms and other tax structures. Timing and execution are key to maximising the value from a transaction and your adviser can help.
If you are interested in reviewing your investment accounts or know someone who would benefit from a review of their investments, please contact us at Lantern Advisory. We are a self-owned and growing financial advice company ever ready to help our customers’ future wealth aspirations as new opportunities emerge.
If you have any queries about any of these items, please contact us.
The information contained in this article is of a general nature and does not take into account personal circumstances. Before making any decisions based on the factual information contained in this document please consult with your financial adviser.