Addressing delegates to the AIOFP national conference in Sydney last week, Mercer sales leader, investments, Adam McKenzie said that in working with institutional clients, the research house and management consultancy has discovered a change in attitude towards the business of licensing.
“The banks are really nervous about their non-salaried, aligned adviser networks, especially since the CBA and Macquarie experience,” Mr McKenzie said.
“They are nervous because it is high risk, they make very little money on the management of a dealership and make it back on the product manufacturing component.
“They are losing control because there is this thirst for flexibility on products. They have taken on board this huge risk.”
Mr McKenzie said the banks are instead more focused on growth in their salaried adviser channels where they maintain greater control and visibility over adviser-client relationships.
More broadly, he said the top priority of the bank-owned wealth management businesses is to “re-engage with their client base”, especially “small to medium passive-type investors”.
“They are investing very heavily in regaining trust [and] are currently developing ways to bring [these customers] back,” he said, pointing to “no advice lifecycle products” in particular.
The comments come as AMP announces it will close its Genesys Wealth Advisers business, following revelations published by ifa suggesting a number of aligned advisers are demanding greater control and product choice and flexibility.
it all flows from the APL. get rid of this requirement and have an ASIC register, with BID and overlay this puts the onus back on the planner.
Part 2. The 85% of advisers aligned to VI businesses should make up their own mind about which style of business applies to the AFSL they currently sit in – an AFSL that has good product but will eventually work out they shouldn’t waste money subsiding advisers, or an AFSL that needs them to push their rubbish product, but they should leave if they want any long term credibility. Or you become independent so you can actually always pick the best available product. And finally, for the “smarties” that think they can have it both ways (get subsidised and write someone else’s product), ask Genesis how that’s going for them.
Part 1.
A huge irony about the financial planning world is that all the VI managers are moronically feeding off the same data and can’t make sense of it. Let me save you all a massive McKinsey Consulting bill. If you have great product in your VI business, you don’t need to risk having an AFSL and rogue advisers, because advisers will write your product anyway. Conversely, if your product is shit, you need an AFSL to force your aligned advisers into writing the rubbish, but then your AFSL is going to be loaded with either morally bankrupt or stupid advisers.
Spot on wildcat. The risks to banks is from the management or mismanagement of salaried advisers. Suggestions that the major risks come from the self employed model shows a lack of understanding. Business owners have often many millions invested and a huge incentive to run great business’s and maintain reputations. The same incentives don’t exist in the salaried channel. The banks know this and has been the reason why they have and will continue to favour the non salaried mode. As for amp and genesis. Amp issues with genysis is more a case of poor due diligence and inconsistent goals between amp and advisers.
This is a little light on in detail? Unless the comments are taken out context – Macquarie for example had problems with their internal adviser network in the stocbroking area not aligned advisers….They don’t have any aligned network under their Licence ??
Equally the CBA experience has been primarily with their salaried network not their aligned albeit latterly Fin Wiz have been caught up in the rabbit lights.
Joel, you are correct but almost all the problems came from the salaried channel
[quote name=”herminator”]I thought the majority of cba and Macquarie advisers were salaried.[/quote]
RE CBA: Financial Wisdom and Count are not salaried. They are self employed.
Reality is banks and other large institutions can’t attract enough quality advisers for salaried positions and haven’t been able to for a decade or more. This whole argument is just a propaganda peice and wishful thinking. Given the size of the aligned but non owned or salaried business’s being many times larger than the salaried model I can’t see the unscrambling of the egg being quite that easy. As for collateral damage pffft!!! That just shows ignorance of reality or easy acceptance of a confected puff peice.
Pavel your reference to ‘the advice model of the NFPs’ is a contradiction in terms.
The Financial Planning industry is one of the few service industries with the potential for significant job creation ( for service !). The push by the NFPs and Banks to commoditise super will destroy jobs and result in significantly compromised outcomes for customers. Dial 1 for xx, Dial 2 for yy blah blah blah. The winners will be advisers that continue to pride themselves on quality advice and service. The collateral damage will be all the disillusioned finance graduates who cannot find a job.
Well, it’s only taken how many years and the reality of the government’s flawed and now defeated FoFA ploy for the Banks and wealth shop to adopt the advice model of the NFPs.
Funky, while I don’t doubt you are a good adviser doing a great job for your clients, I think you and other aligned advisers will be collateral damage in the big insto’s metamorphosis to internalised advice models which they appear to now be pursuing.
If this also includes AMP its pretty ironic. They made all their salaried advisers redundant some years back. All pretty good people too.
The salaried advice channel was closed due to pressure from the self employed group.
How on earth does a no advice lifestyle product help institutions reengage with clients? The concept is seriously flawed. The simple reality is that the institutions undervalue the critical role advisers play and are doing whatever they can to keep their FUM rather than engaging with their advice practises that have been the key to their success. It shows how out of touch the heads of these institutions are with clients and their needs. The money wasted on their salaries is staggering.
I thought the majority of cba and Macquarie advisers were salaried.