ALEX DUNNIN: Paying for shelf space is a long established practice in supermarkets so it’s probably not surprising that it’s happening in investment platforms. But what is the end game?
If a fund manager pays a fee to be on a platform, does that mean all platforms will eventually end up with the same managers being listed, thus turning different platforms into commodities only competing on price and service? And, will the platforms selling the shelf space circumvent process checks such as quality and performance assessments?
Another question is whether there is a moral requirement for consumers to be advised that the menus have been assembled using managers that paid to be there, especially if a consumer is inferring some form of independence on the part of the platform in assembling ‘the best of the best’.
Also, will the shelf space selling issue be managed differently for fund supermarkets compared to platforms with a much smaller range of products on their menus?
Beyond these questions, I believe there is clearly nothing wrong at all with selling shelf space. Indeed, it was only a matter of time before it occurred. But it will be intriguing to see what the impact is.
I shop at Woolworths in Belconnen, Canberra, instead of any other Woolworths or alternative chain. I shop there because the price and service is manageable and because I know where all the items are stacked. Will the same thing happen to platforms in that the basis upon which I choose my platform will change to reflect these dimensions? Once the genie is out of bottle, we can’t put it back in.
Alex Dunnin — Director of Research, Rainmaker Information.
