Speaking to ifa, ClearView managing director Simon Swanson said open APLs are essential for client-centric advice.
“At ClearView, we believe that advisers are experts in their field and they should be able to choose the most appropriate solution for their clients,” Mr Swanson said.
“An open APL is essential if advisers are to exercise their professional judgement and provide objective advice.”
Jenesis Consulting managing director Jenny Pearse also said licensees should have open APLs.
However, she noted that for truly open APLs to exist, the accountability of product failure must sit with the product manufacturer instead of the adviser and licensee.
“I do believe that licensees should carry open approved product lists, but therein lies the challenge,” Ms Pearse said.
“The licensee is considered the gatekeeper between the regulator and the adviser with respect to the best interests of the client and the appropriateness of the products selected to implement the advice.”
However, IFAAA president Daniel Brammall thinks the term ‘open APL’ is “a contradiction”, since an APL is limited to the products that are on it meaning it is closed by definition.
“What’s an open APL? Any product can get on it? That’d be counter-productive to having an APL in the first place,” Mr Brammall said.
“Presumably an open APL means any product can be considered, which still means it’s a limited APL doesn’t it?
“There’s no law against that, but there’s also no law saying you have to have an APL either, so why have one at all?”
Align Financial director Darren Johns suggests that an alternative is to have advisers list their top institutions in which they recommend products.
“Having an APL isn’t required under the Corporations Act, so I’m not sure how you regulate such a thing,” Mr Johns said.
“If we are trying to help clients get access to advice without influence, then I suspect there are better ways to achieve this.
“In the lending world, brokers are required to list the top five institutions that they place loans with. Perhaps a similar approach could work in the advice profession.”
Insurers are regulated by APRA, so all insurers should sit on the APL. I’m not sure the consumer wants a complex investment solution. A couple of investment properties and half a dozen blue chip shares would do the trick.
Its up to every AFSL to create an APL based on their own risk profile. Research ratings will help to a degree but that doesn’t help advisers use all products appropriately. The AFSL shoudl create their own APL policies with consideration to Research ratings, risks, FUM, asset class, sub-asset class, product accreditation requirements, and more.
Opening APLs allows insurers to be more selective with who they want work with. Will insurers be keen to invest more into planner, BDM and licensee support? Otherwise it will mean a potentially poorer experience for our clients. This, coupled with inadvertently including direct products onto APLs among others would be dangerous.
Open APL’s may sound great, but doesn’t change much for the groups with BOLR arrangements that pay a far greater multiple for inhouse products than non-aligned products. The open APL just means they can write elsewhere, doesn’t remove the incentive to write inhouse products.
I think the idea that advisers list their top institutions in which they recommend products has merit, although brokers just nominate the lenders themselves, regardless of whether they write them or not.
Two of the four people quoted here have NO FP qualifications on LinkedIn at 11:05 AEST or the ASIC FAR, one has “DFP ongoing” which is undated. Why would we want to know their view?
Happy to have free APLs for all, product manufactures who don’t have to worry about running risk, governance, compliance, support, PI, training, etc etc etc maybe they should pay for access to distribution, or support those who may sell there product but hold all advice liability, omg this is a slippery slop I feel like Im back where we started !!!!
We are platform and insurer agnostic HOWEVER open APL’s for investment products and having a reasonable level of PI Insurance is difficult. If you just go on a research house star rating and use 4 or 5 stars you still end up with 300+ investment products and many are not achieving consistently to the benchmark as stated in their PDS’. I think further thought needs to go into this topic.
I think this is a great point, and if further thought should go into open APLs or APLs in general then we should spend that time thinking about what goes into the approval of a product for an APL. I tend to think of APLs as a risk management tool for the practice and the financial planner and should reflect an attitude about your risk tolerance and business strategy with respect to products and product issuers.
Instead, much of the discussion I see about APLs is instead about conflicts of interest and vertical integration. This is why I think open APLs are touted so much in the IFA space without, in my opinion, much serious discussion about the risk management aspects of an open APL.