Come tax season, a common source of frustration for accountants in practice is seeing how many of their self-directed clients have a less than ideal investment strategy, with little expert thought given to asset allocation or manager selection.
With the exception of those who are also licensed financial advisers, accountants are prevented from offering investment advice. But that doesn’t stop clients, who view their accountant as a trusted adviser, from turning to them for guidance.
Without giving investment advice, accountants want to be able to help clients understand the alternatives available to them, particularly when their nest eggs are obviously underperforming, or at real risk. (Data from the Australian Taxation Office shows the average SMSF with a balance of less than A$200,000 posted losses in the three years to 2016-17.)
Andrew Varlamos, the co-founder and chief executive of OpenInvest, says providing accountants with a solution to help them navigate this conundrum was one of his goals in setting up the OpenInvest digital marketplace, which helps investors access diversified portfolios from top asset managers.
Picture: Andrew Varlamos.
A model portfolio solution
“We’ve had thousands of trustees engaging with the different asset managers on the platform,” Varlamos says. “Our framework, or philosophy, is all around giving customers all the information they need to help them choose an investment manager.”
Importantly, it is not just a marketplace of ‘managed funds’. Asset managers that sign up to the service need to provide investors with a diversified portfolio that might include a number of listed shares, along with funds and exchange traded funds (ETFs), to provide an investor with the appropriate level of diversification.
Varlamos says that he knew from the beginning that investors didn’t need another marketplace of just managed funds – they needed an overall portfolio solution.
OpenInvest provides a level of free information to users. A Learning Centre on the website offers engaging content, including a series of quizzes so investors can understand their individual level of financial knowledge and be realistic about what they do (and don’t) know.
Free from conflicts of interest
Varlamos is proud that a point of difference between OpenInvest and other platform-style services is that there are no conflicts of interest in its remuneration model.
“The Hayne Royal Commission has highlighted to everybody how pernicious conflicts of interest are,” he says. “OpenInvest is designed to work in with how accountants want to work, whether they are licensed [financial advisers] or not. It’s a logical fit for them and that’s particularly the case in a post-Hayne environment.”
“OpenInvest is designed to work in with how accountants want to work.”
Investors maintain beneficial ownership of the shares and managed funds in their portfolio, and are charged a 35 basis point administration fee by OpenInvest (waived for the first 12 months), with no brokerage fees charged to clients. There is also an investment management fee charged by the asset manager.
There are seven asset managers currently on the platform: Macquarie Investment Management, Schroders, Shaw and Partners, Clime, InvestSense, SG Hiscock & Company and JBWere. Each offers four different model portfolios across the risk return spectrum. More asset managers are tipped to join the platform soon.
The OpenInvest online portal gives investors complete control of their portfolio choices, 24 hours a day, seven days a week.
To find out more, go to openinvest.com.au or call 1800 954 549.