Of the 188 respondents to the straw poll, 106 (56.4 per cent) responded ‘yes’ to the question “Will the banks slash their advice offerings post-FOFA as they have in the UK?”, while 82 (43.6 per cent) responded ‘no’.
The UK financial advice market has seen significant changes in its composition since the introduction of the FOFA-like Retail Distribution Review reforms in January, with more than 5,000 salaried bank financial planner jobs cut and household names such as HSBC, Santander and Lloyd’s TSB slashing their advice units.
Overwhelmingly, the decision of UK banks to exit the advice market has been attributed to the new regulatory environment.
The poll results indicate there is fear among Australian financial advisers that similar action may be taken by the Australian banks in response to similar regulatory pressure.
The findings of last week’s Financial Services Council-DST survey of wealth management chief executives – which included that “the cost and volume of regulation is the number one concern of the CEOs of Australia’s leading financial services companies” – are unlikely to assuage those fears.
However, the Australian banks have not given any firm reason to indicate they will respond to the regulation in this way.
Speaking to ifa, Mike Chesworth, general manager of bank financial planning at BT Advice, said Westpac is not going anywhere when it comes to retail advice.
“Westpac and St George Financial Planning are growing both in terms of planner numbers and the number of clients their planners advise,” Mr Chesworth said.
“In Australia, bank-channelled advice provides a vital link between the traditional services banks provide and wealth management. They are fundamental to the intent of FOFA to broaden out the advice offering to more Australians.”
Earlier this year, NAB chief executive Cameron Clyne said the closure of the retail advice units of the NAB-owned UK-based Yorkshire and Clydesdale banks was not reflective of the bank’s “strategy for [its] wealth franchise in Australia”.
Indeed, Vanguard Investments’ Robin Bowerman says the banks have an altogether different strategy.
“The banks [in Australia] have taken a very different strategic path [to banks in the UK],” Mr Bowerman told ifa in June.
“Instead of abandoning advice, they have bought up the major platforms and distribution channels and consolidated them.”
Coles and Woolies for the financial services??
We see how the farmers and the community as whole has benefited from the lack of competition in the grocery space.
Financial services is going the same way.
And who loses the most?? The consumer of course.
Ill give odds at 50:1 that banks will turf out FP’s & go to online, low cost financial planning for the masses. Like it or not your days as a high fee charging financial planner are very very limited.
Next to go or be slashed to the bone will be all the BDM, practice management & compliance staff. They will take longer but the leeches will go in time.
Interesting article, looking into the future…. i feel the big issue will be how advisors and the IFA market are allowed to operate. Competition breeds growth,less competition and control industries reduce. Time will tell
Maybe the survey should have been “will the Australian banks benefit from FoFA” and clearly they are. They already own 80% of the advice market either directly or indirectly and this will only get larger. Heading for 95% ownership at a guess. Then they will ditch the smaller client and some adviser numbers, because they can.