Speaking to ifa, Kearns said his organisation’s official client advisory group – which is chaired by an independent professor of ethics and meets regularly to provide feedback on services provided and business strategy – said there are some clear priorities emerging in these sessions.
“Non-alignment is an incredible positive for future clients; our clients certainly provide us with feedback that they value what they call our ‘independence’, which we inform them they should call ‘non-alignment’,” he said.
“This issue [of vertical integration] is on the radar of consumers. Our client advisory group is clearly sending us a message that they want three things: security, value and honesty. That honesty really boiled down to non-alignment – they wanted to be sure that we weren’t getting kickbacks and commissions and that sort of thing.
“In terms of security, they want to know who our board members are, what our investment strategy is, and that transparency clients are looking for fits well with a non-aligned structure.”
Based on his experience with the client advisory sessions, Kearns said consumers will pick up on any “loopholes” in the remuneration system in the wake of Future of Financial Advice implementation and will vote with their feet.
“Our feedback suggests any conflicts of interest would turn them off that company,” he said.
“If you can afford to be as open and transparent as possible and not have to rely on loopholes, we think that is positive in the eyes of clients and will work to your advantage in the long term.”
Kearns said the meetings allow the company’s management to hear ideas from the general public, some of which he says he intends to implement, as well as for clients to better understand the compliance restraints under which advice companies operate.
Dear Phil @ Centric,
The big problem is that Vertical Integration is not declared and it is very well and intentionally hidden by the big banks / institutions !!
I don’t think this is such ground breaking information as the banks know this exact same info – why do you think they do everything possible to hide the true owners of their vertically integrated dealer groups, advisers and products.
Wake up ASIC and make this a priority to have the big institutions clearly identify the true owners of ALL their vertically owned businesses structures in the advice chain.
Wake up non-aligned advisers, this should be the number 1 issue that we lobby for, true disclosure of vertical integration [b]and a client sign off that they understand who the true owner of the financial services and products being purchased come from. [/b]