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Can't get away with anything at Dover. they pre-vet all your advice and if you aren't up to scratch you are gone and reported to ASIC.
The bank tellers union may have been complaining on behalf of their members, but the association supposed to be representing financial planners (FPA) has said nothing about the problem of bank executives pressuring their members to act unprofessionally. Surely it couldn't be anything to do with the FPA receiving a large chunk of their revenue from CBA? Or the FPA's recent Chair, CEO, and Sydney Chapter President being bank executives?
Neil and Dante, now is the time to be bold. Get rid of the "Professional Partners" program. Get rid of grandfathered CFPs. Turn the FPA into a professional association.
This is, after all, only an opinion. The author needs to do a little more research to get his facts right..
Exactly. This is the real issue. Middle managers remunerated on the basis of sales, pressuring advisers to compromise their integrity and professionalism. It is much the same issue the bank tellers union has been complaining about for years.
If the RC thinks this is a compliance or process issue, they have completely missed the point.
That comment is completely incorrect. Synchron has a written reference form the bank's compliance manager that neglected to mention that they (the bank) had already reported a breach. Read last Friday's RC transcript to see a similar example (different adviser).
As there should be. If you're actually servicing those clients there will be no issue as they will just sign a fee agreement.
If you're not servicing that client you don't deserve to get paid. Got to get the fossils out for this to get better.
At last! Someone who understands "vertical integration". Well said Scott Barlow. Just another poor assessment of what it's all about by someone who should know better.
What Uni student wants to join AMP now let alone the industry? Good one AMP!
Independent as in non-aligned, or independent as in actually independent (not allowed to receive commissions or any payments at all from product providers?).
Great article Aleks.
No, what's dead in the eyes of the public is trusting financial institutions to do the right thing.
The public vaguely understands the idea of a conflict of interest and they have this sense that our institutions are riddled with conflicts. They have no idea about 'vertical integration'.
Let's be clear about one thing. The issue is not vertical integration, it is unmanaged and/or undeclared 'conflicts of interest'. Scratch the surface of those who would seek to entangle the two issues and you'll find an ulterior motive; a vested interest or some turf to protect or incumbency to shore up.
"Vertical integration" is properly understood right throughout all industries. It is the combination in one firm of two or more stages of production normally operated by separate firms.
A farmer who opens a butcher shop is vertically integrated. An iron ore miner with a steel-making factory is vertically integrated. Your local farmer's market is a vertical integration; the milk cooperative too.
Amazon's acquisition of Whole Foods is a vertical integration. The point should be obvious - vertical integration is good for consumers because it is key to innovation.
Texas Instruments foray into vertical integration drove down the prices (and vastly improved the quality and availability) of calculators and digital watches. (Of course Bowmore and Commodore - the leaders at the time - campaigned against the move, but that's competition for you).
Vertical integration allows a company to distribute an innovation amongst its own user/customer-base. Think about this. If you come up with a better way to construct an investment portfolio (as my firm has), who is going to risk trying out the innovative method on their own customers? Certainly not your competitors. And probably not your key business partners either. If your innovation doesn't work, the failure will be quarantined to your business. If it does work, the industry will move towards your model, and others will be free to improve upon it again.
Removing vertical integration from financial services would be an extraordinary move given it is prevalent in all industries. It has repeatedly been shown to benefit consumers above all else because it (i) lowers transactions costs, (ii) contributes to ensuring supply, (iii) improves coordination, (iv) drives and builds technological capability, (v) facilitates deep specialisation (hence broadens consumer choice appealing to broader needs etc).
If vertical integration was banned, it would ensure large institutions can use their scale to limit the penetration of new entrants. There would be less specialisation, less technology and a homogenisation of the industry. Arguably, this is already happening. A ban would only be to the benefit of incumbents. This perhaps explains its appeal amongst many so-called 'independent' financial advisers. Show me an IFA who campaigns for a ban and I'll show you an IFA with no genuine value proposition around their core functions - investing, and planning - and thus who requires additional barriers to entry, homogenisation and no change to the status quo in order to survive and appear relevant.
Seems to be only Head of Comp since Jan 2017!!!
So why roll them over costing $25K if nothing in it for Mr E? MyNorth SuperPension PDS shows Member Advice Fees can be charged up to $5,125 + 2.51% for initial, ad-hoc, ongoing, listed plus up to 4.10% of each contribution and rollover. Do we know what Mr E was charging these clients?
thought the same thing. There may be a strict compliance audit..but some Advisers simply choose to ignore the requirements. I think, yes Licensees should chop advisers, but its not so easy to do quickly.
I agree with the conclusion but not the reasoning. Let's be clear, there is no such thing as conflict free advice. AIOFP members, IFAAA members, accountants, lawyers and doctors all have conflicts. The real issue is how conflicts are managed.
The big problem with vertical integration is that the extreme sales culture of the banks just makes it too hard to manage those conflicts. There are too many middle managers with sales based performance metrics, who put lots of pressure on advisers to compromise their professionalism.
This same problem is now also happening in corporatised medicine. In recent years lots of small medical practices have sold their client bases into big medical conglomerates, and now find themselves working for sales driven bosses who pressure them to cut short appointments, request unnecessary pathology and scans from other divisions of the company, and refer to company aligned specialists. In short, they are being pressured to compromise their professionalism. If you speak to any doctors caught on this treadmill you will find many are tortured souls. Not unlike a lot of bank planners.
An interesting observation in relation to the FASEA education proposals...how many degrees/honors/MBA's do you think these Bank Execs had - plenty I am sure and did it ensure they were ethical - doesnt look like it. Yet FASEA thinks that ensuring all advisors are degree qualified will solve the problems.
Sounds like Dover is doing an outstanding job picking up all the rubbish that is coming out of bank-aligned firms and reporting this to ASIC...
I'm also aware of the case he's referring to because while he left it off this article they are more than happy to mention the company behind closed doors. In the example he mentions, the adviser gave referees who happened to be his friends from within the bank. Synchron didn't ask for any further references from his boss, or compliance manager or anyone else... what did they expect?
Maybe everyone joins Don's licensee - Synchron. 4 Page Risk Insurance only SOA, most ASIC bullet proof licensee in the country. No old life agents joins them because they only recruit less than 50% of applicants, their due diligence is state of art and again ASIC bullet proof. Don send those terrific emails to Millennium3 planners to join your licensee. Rumour is your trying to get rid of SOAs and get back to CAR (Customer Advice Records). I'm sure ASIC will listen and act accordingly. All planners should join this non intregated licensee which is totally ASIC bullet proof.
In honesty, Royal Commission should focus on terminating Executive managers who either refuse to act or leave it too long to act when problems occur. The systems, processes and controls are in place, it is lack of leadership that have caused those issues. Severe fines should apply to AMP and banks including termination of executive managers whom are at 'fault' in all instances.
AMP need to rename the "AMP University Challenge" the "Adam Palmer Advanced Diploma in Applied Finance Challenge".