Speaking on a panel at the 17th annual Wraps, Platforms and Masterfunds conference in the Hunter Valley, AMP Advice general manager Eric Gibson said there are real logistical and commercial reasons why APLs can not be entirely open-ended.
“I think at the end of the day our goal is to have a broad-based APL on all of our licences, we have a research framework to assess products,” Mr Gibson said. “I don’t think we’re going to get to one where every single product in the universe is on one APL at this stage. There’s a cost involved in that, in terms of managing that, maintaining your research and staying on top of it.
“We’re trying to have some flexibility in the system to meet that demand but … to have every one of them on your APL and to try and keep your research up to date and to keep monitoring and managing it is pretty significant.”
Kerry Thomas, head of advice at Fortnum Financial Group, concurred with Mr Gibson that risk and governance issues can override the need for openness when assessing aligned advisers’ product recommendations.
“For us as well, as a smaller licensee it’s exactly that same principle in relation to governance and certainly when most of your research is coming to you from an outsourced provider, so that’s an additional cost and consideration that we need to make,” Ms Thomas said.
“We don’t necessarily have agreements in place with every single provider in the market, so when an adviser does make an application for something to go on the APL, that’s something we have to consider.”
At the same time, Ms Thomas said licensees need to “stay close” to their advisers and make sure that they are removing any impediments to acting in the best interests of clients.
Shartru chief executive Rob Coyte said that while open APLs for insurance may be more feasible, investment products need to be heavily scrutinised by licensees.
“There’s a lot of risk tied up in actually running a broad, open APL, and as a licensee it’s our responsibility not just to put things on the APL, but to actually monitor what these guys are doing,” he said. “We just in the last year found a couple of high-profile fund managers that were basically cheating, and we called them out and we worked with the research bodies and they agreed with us.”
Many advisers are not skilled at running portfolios alone, making broad APLs problematic, Mr Coyte added.
ClearView’s Chris Blaxland-Walker said that while there are risks and a need to apply a robust investment knowledge to APL assembly, often the lists are used to ensure that “house product always has to get put through”.
He said that limited APLs for insurance “limits an adviser’s ability to make informed decisions” and are “actually wrong”.
I like the statement [i]”We don’t necessarily have agreements in place with every single provider in the market” [/i] Having my own small AFSL I have ZIP “agreements”” in place. . “”agreements”” is large dealer group talk for what is essentially conflicted remuneration or in short you pay us a bucket load of money and we’ll promote you ahead of the others, and we’ll let you email our advisers.. So the whole story of open ended APL is a complete joke. These are the fat cats, the pigs at the trough that are at the steering wheel of professional financial planning..we are in serious trouble still and these guys are going to get a shock when Labor gets in.
you summed it up quite nicely thank you. and that friends is the problem with the current system.
Before being concerned about the APL, I am more concerned that AFSL Management have FP qualifications and experience – like the Advisers they oversee. Otherwise their opinions are just waffle.
completely agree, they should have both, a degree [b]and[/b] experience. every compliance officer, responsible manager and others who are in a position of responsibility[b] must have[/b][u][/u] a post graduate degree (preferably masters or PhD. ) like I do in [i]financial planning[/i], not law, not commerce (unless that is with a FP major), no MBA’s etc. only relevant degree is a financial planning one.
Actually, to be fair, a law degree for Compliance people is very worthwhile. Otherwise, yes, AFSL staff should meet Adviser education requirements.
For AMP to say ‘I think at the end of the day our goal is to have a broad-based APL on all of our licences’ is a load of corporate jibber jabber. They have had decades to get to their ‘end goal’. If they aren’t there now, they will never get there. Just be honest, we all see through this rubbish and you’d get more respect for being transparent and talking the reality.
of course AMP will say that. what crap, all they do is push there advisers to use their products..having nothing else to use just guarantees this.
Anything that AMP say about APL’s is just a nonsense. They have been flogging in house product for years and now it shows with the whole distribution effort of AMP under scrutiny and its financial performance getting worse. They just cannot understand that they have to compete on price and features.
AMP Life Ltd just jacked up Premiums for 2017-2018 by 15% so you can imagine how competitive they are going to be Not!
In summary its not difficult to run an open APL and guess what it means the AMP product is no longer a protected species. See what happens then..
Merv, I cant speak for the AMP Financial Planning licensee but when i was with Charter we had every insurer on our panel and on the investment side we had a list that was very broad with then AXA and later AMP products making up only 10%-12% of the available funds. The only restriction was on the use of the platform to run it all from. But you could advise on insurance and build a portfolio that had no involvement of any AXA/AMP product.
As for the comments on what AMP Life has done with premiums, well they arent Robinson Crusoe in that respect with most insurers doing exactly the same thing…almost like it was co-ordinated at an FSC breakfast….but that’s another story.
This is the whole problem with product companies controlling advice channels. Even though they may be doing the best thing for the consumer in many cases, the perception will always linger that they are pushing a substandard inhouse product. As a result, many consumers turn to far worse options like union fund insurance or direct insurance.
The sooner product providers are excluded from owning or controlling advice businesses the better.
Don’t stop there, many ‘non bank’ firms are ‘integrated’ ie create in house products, models etc have deals with or ownership in/of so called ‘product manufacturers’ Licencee structure alone will not fix bias that exits ! many overseas ‘study tours’ from platforms/ product manufactures have the same intended effect as so called old fashion ‘conferences’ !!