In his Year in Review commentary for 2014, the Connect Financial Services Brokers chief executive listed the conflict between the aligned and non-aligned sectors intensifying as one of the key themes of 2014, but added that BOLR is an issue that is still flying under the radar.
“Some institutions are still standing by their buyer of last resort (BOLR) structures but they will not be able to survive in the new environment that demands always working in the best interest of the consumer/client,” Mr Tynan wrote.
Describing this issue as an “elephant in the room”, Mr Tynan added that the “negative effects” of vertical integration in terms of subsidy costs, product sales and cultural issues.
“2015 which will see many more changes – but all of them are working towards an industry that will be a global benchmark for the provision of consumer focused advice,” he predicted.
The business broker and former AMP executive also said the end of 2014 has seen a flurry of activity, with unprecedented numbers of practices looking to leave the institutional environment and set up their own AFSL or leave the industry.
More broadly, Mr Tynan suggested 2014 saw a “work in progress” whereby financial advice is emerging as a true profession and casting off the shackles of a distribution mindset.
“The industry has had enough of product providers lecturing the advice profession on what is best practice especially when the majority of the recent high profile disasters such as Storm, etc have been associated with a major institution,” he said.
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If only it was that simple.
The cost of provide sound financial planning advice that is both compliant and in the best interest of the client is significantly underestimated. The banks and industry funds are trying to cut corners and access clients without advice and it simply does not work. FOFA is far too costly and does not achieve its objectives. It penalises advisers and enables the banks and industry funds to go direct. An unlevel playing field. It amazes me that advisers think we need legislation to act in the clients best interest. What have they been doing for 14 years ??
Good article Paul! Massive changes we are seeing at the moment which gives us true faith in the FoFA and best interests model…finally…at last…after we have been struggling for 14 years to see this introduced.