Addressing a roundtable discussion at this week’s Financial Services Institute of Australasia (Finsia) conference in Sydney, CBA executive general manager of advice Marianne Perkovic said uncertainty over grandfathering was creating inappropriate recruitment activity.
“There are licensees out there looking to entice advisers to their licence by offering transition payments to supplement the lost grandfathered revenue,” Ms Perkovic said.
“We are publicly saying this is not right for the industry or the consumer, and we hope this activity dies in a ditch,” she added.
Rather than focusing on recruitment of practices interested in switching licensees, dealer group managers should be looking to increase the number of total advisers in the industry, the executive said.
“We need to ensure the industry grows – that’s why we are focusing our efforts on bringing strong graduates into the industry,” Ms Perkovic said.
The comments followed a presentation by ASIC senior executive leader, financial advisers, Louise Macaulay indicating the corporate regulator is expecting clarity on grandfathering from the new Abbott government.
“We are hearing concerns about advisers being bound to licensees as they lose the benefits of the grandfathering provision,” Ms Macaulay said.
“Our view on the law as it stands is that where an adviser moves licensee then they will lose those benefits.”
“In terms of trail commissions, when a business is sold, our view is that every sale needs to be looked at individually to view the particular agreement underpinning the sale and I expect to be hearing more about this from our new government.”
Do you know of licensees offering transition payments for recruitment? Aleks.vickovich@sterlingpublishing.com.au
The only reason CBA is jumping up and down is because they have been enforcably undertaken by ASIC due to corruption in their advice practice.
So now they have to keep their act squeaky clean or face loosing their AFSL.
Sour grapes!!
Ahhhh yes, the good ole boys at CBA financial Planning & their cousins at Colonial…..the houses of 100 page SOA’s (that a lawyer would struggle to understand) that are shoved under the noses of mum & dad suckers who fell for the old “financial health check” con that the banks & other dodgy planners spruik. Its code for come in so we can size you up for any number of strategies that are good for the bank/planner but useless to you the client because the right plan doesnt pay us fees. The bank that gave Storm Financial the keys to the vault & threw every resource at them to double gear pensioners into a peaking market. CBA, like all the top 4 banks just churn through advisers & clients- always have and these FP execs always will. Ill bet 100 to 1 the current FP execs will be out within 4 years with a new fresh batch to change things again. Tools the lot of them!
To Independant Risk Adviser
Well said,
it is all about executives justifying their role in the industry, sadly very few of these executives have actually worked at the coal face,,,It is great for the CBA to take the moral high ground considering they have had enforceable undertaking via ASIC.
I recently moved from a large dealer group to a small lets say boutique dealer group, No incentive was offered , and all clients were transferred with me , it has been a great and positive experience.
So… let me get this right…. CBA can set up young family with a poor very basic trauma cover that ONLY pays out the loan they have…. before putting food on the table for the family let alone provide for any treatment… A product that cancels out following a payment, leaving the other party with NO insurance! CBA has access to CommInsure products and yet is “allowed” to set up an inferior product. “Best Interest Duty” will be interesting indeed…. and they take the high moral ground on this issue!! Lets not start on in house advisers selling investments to suit themselves and their pockets only.. Its the bank incentives to its tied planners-risk advisers and mortgage personnel and everyone else up the chain of command which is disgraceful. To try to deflect this to slamming dealers for their practice is laughable. Amazing.. how do these executives justify their roles in the industry? Profit share over client best interest. Let’s see how that is played out in banking sector.
Marianne,
I couldn’t not agree more!
During the process of interviewing potential members for Omniwealth Services I have been told of cash offers some AR’s have been made to either stay with their current group or to move to another one, and they are big numbers!
Many of the big groups also don’t hold FOFA legislation in much regard and are quite happy to employ “smoke and mirror” tactics so as not damage their current business model.
I have been on record previously saying that many of the large dealer groups are totally addicted to the income derived from their advisers and as with any addict they will do almost anything to supply their habit!
I reiterate an earlier comment that the vertical integration of product and advice is a sytemic conflict of interest.
I believe the industry should by regulation move to a system where an AFS licence can be applied to either provision of product or provision of advice, but not both. A licensee providing product should be prohibited from enaging in advice or owning (in full or part) any interest in any advice business. A granfather period would be reasonable to allow for orderly divestment and I suggest the natural buyers ought to be the advisers themselves via an unlisted public company.
Someone seems to have forgotten what certain group did pre FOFA. Check your own back yard before taking the high ground, you may have to retract.
What a load of baloney from Ms Perkovic. Is she suggesting that CBA’s recruitment ethics are a cut above the rest, and the CBA have avoided becoming entangled in the current Insto recruitment war??? Reality is just an illusion caused by lack of bonuses Ms Perkovic…
CBA taking the moral high ground? well there’s a first. oh yeah I forgot, they must have turned over a new leaf.
Banks should have their advice business spun out of the bank so that asic can regulate them without worrying about causing a loss of confidence in the banking system if they are coming down hard on banks advice businesses.
This looks like sour grapes to me, the pot calling the kettle black.