Insto in-house product bias on the rise

New findings from Roy Morgan’s Superannuation and Wealth Management Australia report show that in the 12 months to December 2014, Westpac/BT had the highest rate of in-house product recommendation, with 82.4 per cent of people using a Westpac Group financial planner ending up with a Westpac/BT product.

This represents an increase of 3.4 per cent from the previous year.

CBA had 71.3 per cent of its customers in its own product, which was up from 64.2 per cent 12 months ago, while AMP placed 68.4 per cent of its clients into an AMP product.

ANZ had the lowest rate, placing 47 per cent of customers into its own product.

Roy Morgan said this figure was consistent over the past four years and it remained to be seen whether the FOFA legislation would impact these numbers.

However, the market research house added that “it is important to note that often these products are master trusts or wrap accounts, which may contain funds managed by other fund managers". 

“It remains to be seen whether the Future of Financial Advice (FOFA) legislation will have any impact on these numbers, as the large licensee groups are generally restricted to recommending funds from their Approved Product Lists,” Roy Morgan said.

The survey also showed that advice clients remain in the dark about the independence of their advisers, with many still unaware about institutional ownership.

The research found major licensee groups owned by an institution but branded differently continued to be viewed by clients as independent, despite the ownership details, in line with figures from the last survey.

Examples include Commonwealth Bank-owned Financial Wisdom, where 54 per cent of clients surveyed believed the business was independent.

The same was true of NAB-aligned Godfrey Pembroke and ANZ’s RetireInvest, with 51 per cent and 46 per cent respectively believing they are independent.

The research house found that clients were also confused about identifying independence when a planner comes from a major fund manager, reporting that a quarter of AMP members consider them independent.