T&C, Financial Simplicity form joint venture


By Julie May

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T&C Consulting and Financial Simplicity have launched a joint venture to assist wealth management firms across the board in better managing financial, commercial and reputational risks.

The compliance and diagnostic portfolio service, Portfolio Probity, combines T&C Consulting’s experience in advice, portfolios and platforms with Financial Simplicity’s capabilities in software and technology.

Both companies said amid the proliferation of investment portfolios, the rise of managed accounts and several high-profile failures across the industry, manual review processes on their own, particularly when it came to large-scale client bases, were outdated and no longer sufficient.

Financial Simplicity chief executive Stuart Holdsworth said the Portfolio Probity service provided an independent compliance and portfolio diagnostics solution, and was custom designed to provide additional portfolio intelligence around high interest areas.

“It oversees asset allocation, diversification, approved investments and model alignment. It can also provide data around anything from the proportion of certain products on an approved product list to things relative to geographic spread,” Holdsworth told financialobserver.

Portfolio Probity was in a unique position to undertake arm’s-length assessments and ratings, which added a lot of weight in the eyes of both regulators and consumers, he said.

T&C Consulting director Tony McDonald, who previously co-founded and led the Snowball Group (now SFG Australia), said Portfolio Probity improved compliance significantly and proactively ensured portfolios were managed in accordance with their mandates on an ongoing basis, highlighting that it offered a continued path to improvement.

“We’re currently talking to about 10 institutional groups as well as independents, and we’re also seeing interest offshore,” McDonald told financialobserver, highlighting the bigger institutions in particular understood the benefit as they often oversaw larger client bases and required scalable solutions.

“Firms need greater forensic tools and Financial System Inquiry chair David Murray has emphasised that greater obligations need to be placed on product manufacturers and distributors.”

He said wealth management firms needed an industrial strength system with improvement mechanisms, such as Portfolio Probity, emphasising that spot checks were no longer good enough.

Holdsworth said the overlay of information from an independent third-party source would boost trust across the industry, which was particularly important following the advice failures at Commonwealth Bank of Australia and Macquarie Private Wealth.

Further, the proprietary systems behind Portfolio Probity were developed and tested over 10 years and were proven with a number of large industry participants, he said.

“Portfolio Probity is not intrusive in terms of business operations as it doesn’t require IT or systems deployment. It is operated as a bureau service outside organisations,” he said, adding it could tap into various platform and software data feeds with information managed by a core technical team.

The firms said the service was expected to go live with its first clients in the first quarter of 2015.

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