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Big platforms here to stay… at least for now
(pictured: Tony Nejasmic)
Calastone, which has become the major facilitator for transactions between fund managers and platforms in the past four years, doesn’t see many threats to the major platform providers from the mushrooming fintech disruptors.
Calastone’s new business development director, Tony Nejasmic, said last week that the industry was witnessing the evolution of platforms and there would probably be more consolidation, however not to the extent that many people predicted 10-or-so years ago.
Nejasmic joined last week from Macquarie Bank, where he had had a variety of senior roles spanning 15 years. He was one of the founding executives of the Macquarie Wrap and also led the development of the bank’s member-directed investment option service, which was picked up by the Link Group and offered to its big super fund clients. Most recently he was a division director responsible for the distribution of the Macquarie managed account platform.
“There are a lot of ideas out there [for fintech businesses] but many of them will remain just that – ideas,” he said.
Sarah Hayward, Calastone’s managing director in Australia, said that the firm’s “coverage” had grown to about 75 per cent of the flows between platforms and managers since the UK-owned business opened in Australian in 2011. This equates to about $45 billion worth of transactions in four years.
And, notwithstanding the trend to direct investing, particularly by SMSF trustees, Nejasmic believes that “probably between 85-90 per cent” of all retail flows were in the major platforms. Even the newer platforms which are growing quickly, such as NetWealth, have been early supporters of the Calastone system.
“A lot of the new disruptors have really good products,” Hayward says, “but they don’t have the distribution. I think the platforms will have a place for some time to come. They have the distribution and are trusted brands.”
The private-equity-backed Calastone was developed in the UK in order to assist in making markets friction free. “We saw that equities trading was being done very smoothly but not managed funds,” Hayward says. It has expanded its product range by looking at the “pain points” of its fund manager clients. Recently, this has meant helping them cope with orders and reconciliations, automating statements and distributions.
Hayward said the next product the firm had been working on was for in-specie transfers, which have always involved a lot of manual labour. The company is building a market-specific version of its UK in-specie transfer solution for Australia.
Of his move, Nejasmic said that he had been thinking that it was time for a change when Calastone approached him last year. “I like helping businesses grow from the ground up,” he said. “I was the tenth employee when I started at Count in 1992 and I was there from day one for the Macquarie Wrap and with the industry fund project [the MDIO platform].”
