Speaking to ifa, Crestone vice-chairman and head of advisory Clark Morgan said his firm’s ownership model, whereby advisers working for the business take a shareholding, is a model for others to emulate.
“Our model, which is based on ownership being held by the staff, is designed to developed proprietorial and non-aligned advisory businesses. It is the best – perhaps only – way to establish a true advisory business,” Mr Morgan said.
“Having advisers and senior management as shareholders in the business is a major positive from a business and client risk perspective as they are naturally dis-incentivised from adopting an approach that might favour a parent company – there simply isn’t one, and for a true advisory business that independent thought is critical.”
While Mr Morgan said other professional firms are likely to have a similar focus on conflict mitigation and the best interests of the client, he said Crestone’s ownership model and “collegiate approach” is advantageous to “best practice”.
Crestone was launched in 2015 after a number of senior UBS managers, including Mr Morgan, bought out the Swiss financial services giant’s Australian wealth arm.
The firm has fewer than 80 shareholders, many of whom are advisers or executives with the firm.
“If I was going there, I wouldn’t be starting from here” – famous Irish saying.
The problem with the industry is the legacy thinking of the product manufacturers. To be honest, the institutions give little more than lip service to the idea of the Authorised Representative being a professional.
Reality is the sole agency system is alive and well.
Good luck to the boys and girls at Crestone. You are on the right track.
Perhaps the thought of removing conflicts once and for all between all stakeholders in this industry is also something to think of. Product manufacturers ought NOT have a sales force regardless of the name or structure they promote themselves with. Advisers can then deal with the public and can provide a product based on features to benefit the client and not the extent of commission paid. Commissions ought be considering the cost of marketing and servicing a client both now and ongoing. Say a hybrid structure at say 80/20 but this is paid across the board regardless of insurer. Hey presto…no conflicts either. No volume bonuses or kickbacks to dealer groups, the ISN, no direct advertising to consumers by product manufacturers and their sales force. Nice and clean stuff. Oh and no kickbacks or co-sponsoring associations like the FPA or AFA either. Now we can have true representation as advisers from our associations as opposed to the nonsense we have where even our associations throw IFA’s under the bus to satisfy the product manufacturers whim and if that means stonewalling us and our howls of protest, they don’t seem to care. If they do, they sure have failed in convincing many as to the worth provided.