In a letter to its members seen by ifa, the Association of Independently Owned Professionals (AIOFP) suggested regulatory changes in 2013 which implemented a ban on conflicted remuneration are to blame for the control retail platform managers (RPM) now have over advisers’ client ownership and largely eliminated white label models.
“The institutions did not like white having too much power with legal agreements protecting the advisers’ revenue share and ownership of their clients. The grandfathered revenue ban orchestrated by the FSC/FPA/AFA commenced on January 1, 2021, completed the objective of white label elimination along with the adviser legal agreements,” it said.
In November, both the Macquarie and Netwealth platforms blacklisted new business for all advisers operating under the InterPrac Financial Planning license after its deep entanglement with the now collapsed Shield and First Guardian funds. Both platforms also found themselves in the hot seat with the regulator over matters related to the funds.
Then in March, HUB24 followed suit, blocking new business from these advisers.
The association then went on to explain how it believes the platforms who also own the trustee role is further eroding adviser control, and how the events surrounding InterPrac shone a light on the situation.
“White labels have made a spectacular relevancy comeback due to the ‘Interprac Incident’ exposing the facts around the absence of client ownership and legal rights for advisers. For the last decade RPM have treated advisers like ‘mushrooms’ considering them ‘babysitters’ of clients and concealing the facts around who owns and controls the advisers’ clients.
“Due to the FOFA conflicted remuneration rules, there cannot be any revenue sharing involved but controlling/owning clients is the key issue in today’s world. The realisation that an RPM who also owns the Trustee role assumes total ownership and control of all captured consumers is an alarming wake up call for advisers.
“This fact, and its ramifications on 60 per cent of the adviser profession who currently use RPM, has led to the literally overnight revival of white labels.”
Further, the association argued that providers’ move to “act in solidarity” against InterPrac by blocking them – despite relatively few advisers actually being involved in the misconduct – was actually about “[quelling] the potential uprising of advisers” and “[protecting] their conflicted business model of being the trustee and denying advisers having any legal rights”.
“This is tantamount to cartel behaviour and must not be tolerated, the only levers Advisers have is to not place their client’s capital into this RPM trap or justify moving it to another product based on better an outcome for the client.”
In retaliation, the AIOFP is calling for dealer groups and advisers to put pressure on RPMs to “uncouple the conflicted trustee ownership then agree to installing favourable adviser agreements or you will move to other better options for your clients”.
“Widespread adviser support will make them think again about their business model, this is an ideal opportunity to demonstrate ‘adviser power’ by turning the table on these arrogant and deceitful RPMs.”
AIOFP….
Who are ya?
AIOFP raises some good points here. Why on earth is ASIC not looking into Macquarie Wrap’s conduct regarding in specie transfers OUT of the platform.
Of course, you can in specie IN to the platform though Macquarie wont allow you to move to a new platform.
This is anti-competitive and not in our clients best interests. Effectively, its traps you into Macquarie.
AIFOP – what are your thoughts on this?
Correction required: Interprac AFSL had 5 out of 300 advisers involved with Shield & First Guardian.
Those 5 advisers apparently lied about their involvement and produced statutory declarations to the AFSL, denying involvement.
Importantly, we (advisers) now have evidence that the cartels will continue to exploit us and use any excuse to justify their actions. Watch out for the institutions, they’re a law unto themselves.
What is he going on about? It seems that the messages issued by the AIOFP are just getting more incoherent the longer that this is allowed to continue to happen.
Should be more worried about their mate Garry Crole and how licensees think they own the clients!