Few would disagree that a strong regulator is required for a strong superannuation system. But APRA’s myopic focus on cost to members means its $70,000 Christmas party is unlikely to help its reputation.
Good investing requires real sacrifices, according to Oaktree’s Howard Marks, but you can’t expect to be compensated just for making them.
Bravura lines up for NZ robo-advice game
ASX-listed financial software firm Bravura is poised to roll-out an Australian-built digital advice system for the New Zealand market. Kylie Bryant, the newly appointed Bravura NZ country head, said the group was adapting the Midwinter digital financial planning suite for that market in anticipation of growing demand in the sector.
“FSLAA [the Financial Services Legislation Amendment Act] will reshape how financial advice is delivered in NZ and digital advice is going to be an important part of the change,” Bryant said. “We think Midwinter – as a goals-based, independent digital advice system – has a competitive edge for NZ institutions and advisers.”
Known primarily as a registry and back-office systems firm, Bravura bought the Sydney-headquartered Midwinter last August for A$50 million as part of a push into other links of the financial services chain. Bravura followed up two months later with the A$25 million purchase of Australian financial ‘microservices’ software business, FinoComp.
According to a May 2020 investor presentation, Midwinter offers a financial planning business management and compliance platform, AdviceOS, as well as the ‘scalable’ Digital Solutions online advice system.
“Digital advice is a rapidly developing market in which Midwinter has proven technology,” the Bravura presentation says. “Midwinter is well placed to capitalise on continued change in the Australian financial advice industry. Midwinter has also received significant interest from New Zealand financial institutions…”
Bryant said while FSLAA transitional regime start date has been postponed (from this June until at least March 2021), many NZ institutions, KiwiSaver providers and advisory groups were exploring robo-advice options now.
The Financial Markets Authority (FMA) has issued limited digital advice licenses to eight providers since opening up an exemption from the current law in 2018. Milford Asset Management was the latest to join the robo club after gaining an exemption this month. However, to date digital advice has largely been a flop in the NZ market.
But Bryant said under FSLAA, which fully legalises the robots, the demand for digital advice would accelerate.
Bravura NZ head of sales, Martin Gould, said as well as FSLAA, the recent market shock, fee pressures and a regulatory push on KiwiSaver providers to help unadvised members would also underpin the growth of robo-advice here.
Gould said the current robo-advice solutions in NZ tended to be “quasi distribution channels”.
“But robo-advice could just be advice,” he said.
Midwinter boasts 60,000 plus end-users of its digital advice software in Australia and more than 200 advice dealer groups or industry superannuation funds as clients. In total, over 2000 Australian financial advisers (or support staff) use the Midwinter product, churning out a collective 1,500 or so advice documents every day.
While Bravura would have to tune the Midwinter engine to NZ conditions – updating tax and local product rules, for example – Gould said the required changes were “not major”.
He said Midwinter would also “plumb” directly into Bravura’s Sonata registry system, providing a smooth “end-to-end” advice-to-product solution.
“But Midwinter is platform independent and will integrate with other third-party systems,” Gould said.
Typically, Midwinter users stamp their own brand on the white-label software.
Bravura, however, is not the first to pitch an Australian-designed robo-advice system to the NZ market. Before its spe3ctacular implosion, Sargon had touted the prospect of rolling out the Decimal digital advice software to the NZ market. Sargon bought Decimal, a pioneering Australian robo-advice provider, in 2018. Another Australia-headquartered digital advice software firm, Quantifeed, has also been exploring opportunities in NZ.
Bravura reported total revenue of A$135 million in the first half of 2020, split between wealth management (A$91 million) and fund administration (A$44 million). Key NZ Bravura clients include Westpac, Mercer and Partners Life, which all use the group’s Sonata registry system. Trustees Executors also recently re-signed as a Sonata client. Registry and fund administration software tends to be sticky business, but Bryant said Bravura would continue to search for new opportunities such as Midwinter.
“We now have an innovation team that is looking at how new disruptive technology – like artificial intelligence and blockchain – could apply,” she said. “The pace of change in technology is increasing and we have to keep ahead of it.”
Bravura has about 1,400 employees globally, including 150 based in NZ.
– David Chaplin, Investment News NZ
