Speaking to ifa, Powerwrap chief executive William Davidson said advisers need to realise there is life beyond the inside of a bank.
“They’ve built up great relationships with their clients – that is, their clients trust them and they distrust the banks,” Mr Davidson said.
“So it is a perfect opportunity for them to move and establish their own independent business.”
Mr Davidson made the move from Bennelong Wealth Partners to $7.2 billion FUA platform Powerwrap in October 2017.
Powerwrap, he said, offers institutional-level pricing to advisers with high-net-worth clients who have left the big institutions.
The platform counts UBS spin-off Escala Partners and Koda Capital among its major clients.
“The movement to boutique [advice practices] happened in America first, it happened in the UK, and it’s happening here,” Mr Davidson said.
“Clients have trust in their individual adviser moreso than they do in the banner that sits across them. The brand seemed to be getting them into more trouble, whether it’s Macqaurie going into enforceable undertakings or banks before the royal commission.”
The decisions by CBA, ANZ and NAB to exit wealth management in recent years is a tacit admission that the incentive structures for their advisers are broken, Mr Davidson said.
Westpac/BT will continue to hold onto its vertically integrated business model for as long as it can, he predicted.
“And they’re just providing additional disclosures. But the problem is that those additional disclosures are embedded in an 80-page SOA – it’s very difficult for people to understand the breadth of what they’re being offered,” Mr Davidson said.
It is likely that Australia will go down the same path as the UK by creating new categories of financial advisers such as ‘product advisers’ and explicit ‘sales’ roles, he said.
If you have more than 1 product on the apl, then you must meet BID. You can be 100% conflicted ( industry super fund) but you can’t be a little bit conflicted
Not quite. To recommend any product you must meet BID, because the default position is (supposed to be) don’t recommend a product at all, unless there is a meaningful reason for doing so…
“reason for shifting platform: it was owned by a bank” Don’t see that alone as meeting BID
I wonder how our industry is served by slandering bank owned licensees and hence bank linked advisers. That slander is inevitably lands wholly and squarely on all advisers – the consumer doesn’t distinguish.
Additionally, a royal commission into misconduct, surprise surprise, is going to identify misconduct. Were the spotlight equally spread across the industry we would see examples of malpractice from licensees big and small and even the holy ‘self-licensed ifa’. Do we really, truly believe that all the evils of the industry are the product of bank involvement? A little naive in my opinion. If not downright mischievous.
This doesn’t diminish the severity of the identified issues that mus be addressed for it to have a hope of claiming true professionalism.
Having read a number of articles from this site over the past months it is disappointing to see the gleeful undermining of advisers who choose to be licensed via bank owned groups. As identified in this article, there are many fantastic advisers, highly valued by their clients who are authorised in this way. Sparing a thought for them from time to time may be something to consider.
I say not slandering banks and being silent has certainly not worked at all for the advice industry has it. Self regulation has been ZIP due to our relationship with the banks and now we’re over regulated. The line has to be drawn I’m sorry. The thousands of clients impacted by the CBA advice scandal would certainly disagree. I think advisers impacted by FASEA, would also agree. After all FASEA is a direct result of CBA’s recommendation that advisers have a degree. In the same way that there is nothing wrong with a Pharmacist dispensing medicine, there is a room for bank advisers but an adviser working for a white labeled product manufacturer well that’s not appropriate any longer in my book.
The winners out of the Royal Commission will be the banks as they have the economies of scale to cope with regulation whilst small independently owned advice firms (oops illegal term) will be squeezed out.
What I find strange is the issue that started the whole regulation process was Storm. The IFA market seems to forget this, and the fact that they didn’t represent positively at the royal commission either.
Regardless advice can be provided to clients in a variety of ways and no surprise there is good and bad advice in every structure. The beauty of this is clients have a [u]choice[/u]. If you are an IFA bashing the banks for selfish purposes you are no better than the union funds and are actually playing directly into their hands.
110% agree. If you’re working as a self licensed adviser and you’ve tired your horse to a product provider…well you need to make a decision as to whether you want to be a professional or unprofessional. If you want to be unprofessional then let’s regulate the hell out of this sector.
Just look now at the conversation around commissions. Being licensed by a bank owned institution is like driving home drunk and smoking bank tellers. It was acceptable in the 1970’s but today…tell a 20-30 something aged financial adviser you’re getting commission and you’ll be looked upon as scum.
Either make the decision to sell the in-house brand and rebrand to that product or just change licensee and 1) join a privately owned firm 2) get your own license or 3) walk down the road to another advice firm and form a pod of like minded advisers. What was common and acceptable prior to FoFA is not acceptable today. We’re over regulated, we’re being compared to cowboys we’re looking at opt in and FASEA, the cost of advice is too much and PI cost is skyrocketing. Advisers aligned or non aligned all care deeply about clients. However hitching our horse and businesses to product providers has not been a successful strategy for the advice industry..this is why we must act. We’ve seen how the FPA has been ignored every step of the way by Treasury due to their relationship and it must end.
Your right, I’ll instantly give better advice when I switch all my clients onto the “$7.2 billion FUA platform Powerwrap” horse ??
Like I said Mouse, we need to walk away from licensing with these product providers whether it be the Banks, Securitor, Garvan, Magniturd, Hillross and or even Powerwrap.
Nice ad champ, we’re not stupid
if you value your self respect and your business- find an alternate licencing provider that is non aligned or privately owned. it is the best move you will make. the big guys use pure round up on advisers- thats how they treat you- expendable to make them look good.
Worked well for Dover
How’s that FASEA, LIF, Opt in, FDS renewal and copious amounts red tape working out for you Ted? Not even mentioning the mud thrown around with the Royal Commission. Just wait till 2019 when you’re new dealer group fees come out as well. If more advisers showed some personal accountability we’d be better off.
Glad to see good old gratuitous product flog hasn’t been killed off by the RC
My thoughts exactly! Pretty thinly veiled tyre-pumping, it’s a shame that their platform pricing is more costly than I can get with a bank-owned wrap. I can’t see the advice business fragmenting into product sales and advice sales, ASIC can’t handle monitoring one adviser type, let alone two.
We already have product advisers. They work for industry super funds.
Touché.
And as a proud industry fund adviser I have no problem with that. Our members know and trust who we are and expect to go into one of our products. We don’t hold ourselves up as being “independent” and if we differentiate ourselves that way, that is ok.
You might want to read some ASIC publications about constantly recommending inhouse products.
True, but the issue is there is only 1 product on the APL…
Yep, nice asset allocations and peformance reporting mate. Why does a balanced allocation for you look like High Growth for everyone else?
Same tired old argument that keeps coming up. Yes, there are industry funds that have greater than 70% in growth assets, but the majority still have 70% as the target.
How do you meet the BID then??……doesn’t matter if you are a salaried employee adviser of an industry fund…if you are giving personal advice, you have to meet it……….appears impossible to meet BID if you only have one fund available to recommend…..you are not an adviser, but an employed industry fund sales rep.
You tell your members in the SOA how much your union funds donate to the Labor party?
Absolute dross