For super funds and their advisers

UBS’s Crestone spin-off goes with Avaloq platform

by Greg Bright 
UBS Wealth-spawned Crestone group, which starts life on October 1 with more than $20 billion under advice, will use the Avaloq platform developed for Deutsche Private Wealth rather than that of FNZ, which has had an alliance with UBS Investment Bank for big super funds.
UBS Wealth initiated a review of its wealth platform technology prior to its decision to offload the wealth division to its planners and management, announced in May, with FNZ at the time considered the frontrunner to win the new arrangement. However, Crestone Wealth Management has appointed Avaloq, the software firm behind the massive build of the new Panorama platform for Westpac’s BT Wrap as well as the Deutsche system.
A spokesman for UBS Investment Bank said that UBS Wealth, as a separate entity, had never had a relationship with FNZ. And the decision on the new wealth management platform was taken by the new entity, Crestone.
He said that the relationship between UBS Investment Bank was ongoing and getting deeper, with the two organisations continuing to work on enhancements to the member-directed investment options (MDIOs) for their clients.
FNZ, which, thanks to AustralianSuper, stole a march on all other systems providers in the new MDIO space, has had a troubled past year or so due to redundancies and resignations in Australia and New Zealand. While the business has grown rapidly in the region, this growth has had to be funded by the European parent.
Former Labor senator Nick Sherry, who was a non-executive chair of the Australian business, remains chair but has taken on more of an executive role too, following the departure last year of CEO Marshall Stephen after only one year in the job. Officially, there is no local chief executive. UK-based founder and group chief executive, Adrian Durham, who is also a large shareholder beside private equity, is spending more time in Australia and his native New Zealand and the group financial control function is being run from London.
The latest resignation is that of Christina Liosis, who had the senior accounting role in Australia. She is returning to the superannuation space with Trimantium Capital, which funded the disruptive start-up Good Super, where she becomes CFO from next month. Liosis is an experienced super fund executive, including the CFO of Telstra Super and finance manager at Cbus as well accounting and tax manager at Mercer. She is also a director of the Royal Women’s Hospital in Melbourne.
Complicating the choice for some big super funds is the role of Macquarie Bank in a unified AAS and Superpartners member administration platform. Macquarie entered the MDIO space through a deal with AAS prior to parent Link Group’s purchase of Superpartners last year. It built a dedicated ‘pipe’ to AAS and several of the administrator’s big clients, including Mercer, have adopted the Macquarie platform for their MDIO offering.
But some of the biggest Superpartners clients, led by AustralianSuper, were early adopters of the UBS/FNZ MDIO platform. AustralianSuper and fellow UBS/FNZ clients Cbus and HostPlus are now being migrated to the AAS member admin system. Other UBS/FNZ clients are Telstra Super and QSuper.
The sales effort for the UBS/FNZ alliance has been depleted since Patrick Liddy left last November. Liddy had effectively been the head of sales and marketing for about 18 months, through his consultancy business MSI Group, and has not been replaced. He left after having a falling out with Marshall Stephen, who subsequently had a falling out with Adrian Durham.
A more important factor for both the funds and their service providers, is the lingering question mark over whether the MDIOs will attain sufficient scale to justify the investment in their development. The funds are now seeing the MDIOs as more of a member engagement tool than a realistic alternative to SMSFs for high-balance members.
And the space became more competitive since FNZ and UBS first entered it with AustralianSuper in 2012. Lonsec followed and won the $6 billion Melbourne-based Catholic Super MDIO and Linear, an affiliated company of JP Morgan, more recently won the $54 billion NSW First State Super.
Meanwhile, at Crestone, almost all current UBS Wealth employees have been offered jobs at the new entity from October 1. Senior staff are also being offered equity, which is likely to be controlled by the advisors who are going over to Crestone.
NOTE: An earlier version of this report incorrectly implied that FNZ had split with UBS Investment Bank.

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