In addition, it is acknowledged that the growth of investor platforms such as Master Trusts and wrap accounts provide local investors with benefits of consolidated administration and reporting choice when compared to similar investors in other markets. We are starting to see other markets such as Hong Kong, the UK and South Africa move towards these open architecture environments and again Australia is well positioned to provide the necessary skills and infrastructure to support these activities. For example, an article within the March 2008 edition of the Funds Europe publication specifically profiles Australian investment wrap products in terms of how these may be replicated in the UK market. The article states that ‘In particular, Australia is the model that many see the UK emulating, where wrap are embedded in many financial practices as a vital piece of kit’.

We believe the best tactic in building a financial services hub strategy is to identify selected areas where Australia can become a significant player in our region and to ensure industry and government act in a coordinated manner to promote these opportunities. Like other industries the investment management industry is highly segmented across different providers and geographies. This means that specific components of the investment management process, such as administration are increasingly being allocated to centres of excellence such as Luxembourg and Dublin with investment decision and trading processes being retained in ‘traditional’ centres such as New York and London. It is far better to get economy of scale in areas where Australia possesses a competitive advantage and not try and compete in areas where Australia is already behind the pack.

For example, investment activities that are best supported by access to cheap labour are not areas that Australia should choose to compete. Alternatively we should actively pursue activities of the investment management process that require access to skilled labour, proven experience and well developed infrastructure. As a product development exercise we believe it is crucial for industry and government to work together to identify these specific opportunities and then to develop an overall proposition to take to market.