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Attacking information confusion

19 May 2014  |  Investing

andrew willinkThe financial world has a glut of information; indeed the currency of the industry is as much information as money itself. Making sense of it is thus key to sound investing, but it can be dauntingly difficult. Financial institutions rarely employ the same methods of presenting their data, and they are always interested in showing it in the most positive light. That makes comparison difficult.

Enter Andrew Willink, founder of RateCity.com. He has made a career finding ways to help consumers make simple comparisons between financial offers. In the 1990s Willink was one of the developers of Cannex, then Australia’s largest retail finance data, ratings and research firm. In 2006 he founded RateCity.com.au, an independent provider of on-line comparison services for financial products.

Willink was an early entrant into the provision of on-line information. “When I started the on-line business I was actually thinking of giving information to all the banks and credit unions about mortgages and credit cards because no-one else was doing it in an online way. There was someone else doing it in a hard copy format.

“The trick for it all, which I think is important today, is really categorising products. Putting them into a format that allows you to compare like with like after than have a lot of text that describes something. It was actually being able to simplify the complexity of products in such a way that everyone understood what this was and what a standard variable mortgage rate is.

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“On line you are able to create a data base and then it will allow you to search through that data base (very quickly). Having had that discipline it was fantastic because today the way that we display information -- in a tabular format, or whatever format -- you really need to have that data in the right form. That has been the key for me, to be able to deliver retail finance information, insurance information, just about everything, really.”

Willink says the technical challenge is normalisation: finding ways to standardise different ways of presenting the information. Getting the institutions to participate is also a challenge. Willink’s tactic has been to create media awards, so as to encourage the different institutions to compete with each other.

About 2.5 million people per month go to aggregate sites to garner information. About 75% will have a borrowing focus and 25% will have a saving and investor focus. “From that 25% it is really on line savings and term deposits. I would say the ratio is about 1 to online savings, 2 to term deposits. Because people roll over term deposits every 90 days mostly, they come at least four times to check what their rates are.

“With SMSFs around 35% of their assets are in terms deposits or savings accounts. So the audience is there, looking at it. They might go direct to their institution to roll over their term deposits. We are expanding our offering for people who go to these aggregate web sites so they can look at alternative products that investors look at. So what I am doing is looking at providers of investment funds: ETFs, Mysuper and superannuation plans. The audience is there.”

Most selection of investment products occurs via financial advisers. Willink’s belief is that with the rise of self managed super funds, whose trustees are often wary of financial advisers, there is a need for financial institutions to present their offerings at the retail level.

“Financial funds have been flat footed. Because of FOFA (the Future of Financial Advice legislation) they now need to diversify their access to different channels. I am creating a channel where the currency of payment is cost of acquisition. There are flat fees. It is not based on the size of investment, it is just purely on the transaction.

“The SMSFs are constantly interested. What we are really doing is listing funds in a format that is retail rather than a sophisticated investor concept. The products we will show will be the ones that are meant to be sold in the retail market.”

 

 


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