In an email to investors seen by ifa, analyst Lafitani Sotiriou explained that these two companies are out of sync with the major “structural shift” in the wealth management industry.
Last week, ifa exclusively reported that NSW Nationals senator John ‘Wacka’ Williams – who was influential over the government’s decision to hold a royal commission into banking, superannuation and financial services – is confident that vertical integration will be a priority for the inquiry, despite not appearing explicitly in the draft terms of reference.
Referencing the ifa article specifically, Mr Sotiriou said the senator’s comments should raise eyebrows in the AMP and IOOF boardrooms.
“Make no mistake, if there is an issue for banks owning advice, so too will there be an issue for [IOOF] and AMP the other two fully-integrated wealth models in the market,” he wrote.
“We reiterate our view to avoid AMP and [IOOF]. Not only is there a structural shift towards independence, it now may be accelerated by the royal commission.”
Given the royal commission and groundswell towards independence, the analyst said ANZ may have timed the sale of its dealer group business to IOOF “perfectly”.
“[IOOF] has taken on significant risk with this purchase,” he wrote. “Not only will they have to wait a year to get the asset (I am unaware of any other acquisition where they had to wait a year to extract the business – [which] gives you an indication of where the technology is at), the price [IOOF] paid was too high, and now the fully-integrated model which it pursues is under risk.”
AMP also faces the risk of “intense scrutiny” since it has a “much higher portion of its own products distributed via its network, Mr Sotiriou suggested.
All such advice groups should be mandated to have in CLEAR 48 size font on a full page at the start of the SoA: ” This advice is NOT INDEPENDENT and the products and platforms recommended are linked to the financial planners licencee. THIS MAY NOT BE THE MOST APPROPRIATE ONE FOR YOU” This may hasted the demise of the VI Model.
Why is that AMP advisory businesses are allowed to put a small logo on page 7 of a website with reference to being owned by AMP in very small font at the bottom of that page. ASIC is doing exceptionally well a job at herding advisers into the big four banks and AMP… now they are even talking about raising application fees for a self licence up to $7,500.
Worked as an adviser under the IOOF/ Consultum banner for 10 years. Not once was i pressured by the dealership to use funds offered by IOOF. I used their platform to invest client funds using a multitude of different managers . As our business matured we went down the SMSF/ ETF road , and received nothing but support from the dealer. . When we moved onto our own license , the dealer was transparent and very helpful .And their compliance and research was also first class , and relatively inexpensive .The biggest danger to this industry is not the Royal Commission , but adviser who bag anything that has a pulse . If you don”t like vertical integration, get your own license and see if you can do better .
Hey Christian, please send a simple email off to Treasury saying you are opposed to ASIC increasing the application to get an AFS license up to $7,500 on the grounds it will reduce competition. I’m sure you’d agree it will be a costly impediment for many. You can just email your concerns off and so it won’t take up anymore of your time than what you’ve already spent writing on this post. Submissions close in the coming fortnight.
I reckon we should place a Sell on the FPA as they have a lot to fear also from a Royal Commission and their partnership with IOOF/ Bridges and the Banks via their professional partnership program and are also “out of sync with the major “structural shift” in the wealth management industry.”” as well.
If you think IOOF paid too much for ANZ take a look at what multiple Netwealth and Hub24 are trading at! It was very cheap in comparison and they got the dealer groups got thrown in
Plenty of non aligned advisers choose to use Netwealth and Hub24 because they are good products. However I would be surprised if many would choose to use the old ANZ super & investment products if there was no dealer group coercion to do so. Same for the legacy IOOF products.
Haha yes exactly. Netwealth and Hub24 are modern technology people want to use, ANZ products are not.
No doubt any AFSL holder should be readying themselves for the royal commission, anyone involved with an AFSL holder could be called to appear.
But when you look at recent poor performances of the bank CEOs at the Federal Parliament economic committee, coupled with the banks involvement in recent scandals (Storm Financial, poor financial advice, bank-bill swap rate rigging, AML/CTF, business loans being called in, etc.) I think AMP, IOOF and the industry funds may not be high on the list of those called to appear. That doesn’t mean the findings of the royal commission won’t affect the somewhat shrinking AMP and ever-increasing IOOF.
Most advisers due diligence on a dealer group centres on which platform (operating system) can I efficiently run a commercial enterprise on. People aren’t forced to use platforms, they choose whom to partner with. My accountant doesn’t use 4 different accounting software applications, he would go broke. Are ASIC and the above jaded advisers advocating for an industry of 7000 x 2 adviser AFSLs, each with no capital adequacy, as a better way to service and protect clients?
Your accountant is free to choose which software program he wishes to use and if a better one comes on the market he can change software providers at any time. In reality with APL restrictions if I want to use another platform for the majority of my clients I need to move dealer groups, and IOOF know and exploit that.
The accountants chief software program dosen’t also forbid other software programs from visiting the purchaser, restrict email communications and prevent marketing activities.
Sorry, but your either misinformed or out of date. The APL for all IOOF Licensees include a range of white labeled and retail platform offerings from BT, CFS and IOOF. There is no differential BOLR and no other licensee bias towards IOOF product.
M7 – u have no idea; check Bridges out; completely different to what the other IOOF dealer groups offer
It’s not what’s in your dealer groups best interest and it’s not what’s in your best interest. ..it’s what’s in the clients best interest. Unfortunately this legislation was brought in because the playing field is artificially manipulated to make the home team look good. Name me a platform and as a dealer group I will make other platforms look terrible and un supportive of your business, meanwhile the home teams product I can make look fantastic and make it seem like you get great support, competitive services etc etc..
Isn’t that an adviser duty, to ‘know the product’ and to look through gift wrapping??
What about Clearview where advisers get shares for selling enough Clearview product.
The bridges model is so outdated … it’s from the last century and whilst IOOF can continue to gouge fees from this model whilst all their planners are handcuffed, they will continue to be the last man standing with vertical integration…. they have totally stuffed what was such a good dealer group
you said it yourself. The Bridges model [b]is[/b] outdated. I think time stuffed it up rather than any choice by IOOF
A business requires capital to be run effectively. VI is a problem, but so too lack of capital in majority of advisers business. Legacy thinking is being disrupted, in terms of advice and s923A. The royal commission could go on for ten years.
Nippon Life faced exactly the same impediment and time delay when securing its stake in MLC LIfe from NAB. It is a legal issue not a technological one.
Shadforths and bridges are independent??? Did u just come from another planet ?? The royal commission will hopefully expose all the different under the table deals they have going on
Shadforths and Bridges etc ARE independent – not ‘independent sounding’. Suggest you do your research better. There’s nothing wrong with IOOF’s business model.
hahahahahahahah sorry fell off me chair. What platform do you use at bridges?
If you don’t write bridges “preferred platform” you are shown the door. I speak from personal experience.
You need your head read buddy you’re exactly the reason why we need this royal commission. Let me start… first year planner salaries paid for by Bridges… tick… discounted dealer group fees paid for by Bridges/IOOF… tick… Find me a Bridges Office with more than 10% of clients in either Mac Bank, CFS or BT wrap and I’ll eat my words… I rejected a Bridges offer of employment in 2008 when i was paid a bonus to move clients from a cheaper platform to the more expensive TPS. I suggest you go back to your IOOF PD days and do some more training.
To even insert the word Independent into your response clearly shows you dont understand the financial industry……..the Vertically Integrated model is dead (or soon will be), although I am sure IOOF will extract everything they can from the carcasses of Shadforths & Bridges.
Hotel California. You can check out any time you like, but you can never leave.
If an IFA reader can be hoodwinked into thinking Shadforths and Bridges are independent, what chance does the average consumer have of seeing through this branding deception?
NO, they are not.
BUT, they do have significantly more freedom to choose platforms than many comments here would suggest, whether they use it or not. The Bridges planner demographic continue to cling to the one platform model, now IOOF Pursuit rather than the Bridges legacy product TPS, but the vast majority of Shadforths FUA is actually in white labeled CFS or BT products, with a smattering in Macquarie and BT retail.
It is about time that Politicians start speaking out against the vertically integrated companies that banded together under the Financial Services Council to bring legislation like the LIF to destroy IFAs. LIF was based on apparent widespread churning which ASIC have subsequently confirmed does not exist! It will be good to see the microscope turned on these companies who’s primary agenda has been to put non-institutional advisers out of business so that Australians have no other alternative. The Royal Commission should look at the crushing power of the Banks and Institutions and legislate to ensure that IFAs can compete on an equal footing and can remain viable for the sake of Australian Consumers everywhere. Next in line should be the behaviour, fees and performance of the industry super funds and how there high fees are contribution to the chronic under insurance problem in this country.
Even if IOOF is allowed to retain its financial planning businesses, it seems likely they will be forced to rebrand Shadforths, Bridges, RI Advice, Millenium 3 and all their other “independent sounding” adviser brands as IOOF. Similarly for AMP with Hillross & Charter.
While it may be technically legal to use these brands now with their fine print disclosures, they create a misleading perception for most consumers. This is exactly the sort of thing the Royal Commission is designed to stamp out.
Sorry I call Rubbish, given i am an IFA i think the Royal Commission will cost heaps and achieve sweet F… All. And the Banks / AMP / IOOF, etc will continue to flog vertically integrated products regardless of best interest duty, etc.
Oh but wait, the recommendations will no doubt load the IFA advisers with more disclosure and rubbish red tape to ensure that the Banks vertically integrated model almost smells plausible to the public. :confused::confused:
Perhaps but I think many will be looking forward to the protection that a Royal Commission provides to those who make submissions. Some good reasons for Independent Financial Planners to get their keyboards out and start typing. Surely we’d be stupid to let the FPA and others dictate our future..
I think you’re on the right track, but a more nuanced approach might be needed. Where an APL is limited to products that are owned by an affiliate I think the truth in adverting approach is a good idea. But I do struggle with how the vast majority planners out there, who don’t have their own license but do have ‘freedom’ to choose other products could exist in this model. As an ex-adviser of an IOOF aligned license the bulk of my FUA was/is in BT; so why should my business have to be called IOOF Financial Planning?