Reflecting on the decision of Fortnum Financial Advisers to buy back a 20 per cent stake owned by ANZ, Mr Stackpool commented that this “inevitable path” is the “way of the future” and predicted the move would be “followed by other ING [ANZ OnePath] and NAB groups”.
The consultant confirmed the projection to ifa yesterday, suggesting that “the thinking adviser is no longer going to align themselves to the Ford Motor Company” and criticising the business rationale behind joining a larger licensee.
“A lot of advisers think automatically when looking at a dealer group that they have to be aligned to a big organisation, they have to have a big balance sheet and a subsidised approach – but value is not about being the cheapest, value is about helping advisers to sell valuable services,” he said.
Mr Stackpool conceded that the buyer of last resort policy – which he described as “buyer of first resort” – is stifling the movement of would-be breakaway firms, but said the ability of the “big palaces” to “undercut the dealer fee” is not sustainable, given the growing thirst for independence, anticipating a shift in the economics of licensing.
“The growing number of groups such as Fortnum taking back control is going to mean there is more on offer and [the industry] will be more competitive and the prices will come down and dealer fees will eventually be at what you pay for rent,” he said.
The desire of major financial institutions to hold onto their wealth management arms may also be waning, Mr Stackpool suggested, offering the case study of ANZ’s push into Asia.
“If [ANZ CEO] Mike Smith has a choice between putting another dollar into Asia or a dollar into wealth I’d say he’d say the former.”
The last sentence is the most interesting for me. I think the banks got into wealth management attracted by the FUA and cross sell opportunities. However the profits being derived from wealth management for the banks is very small relative to overall profit. NAB is rumored to be looking at selling MLC. Will be a bold move but could start a new trend for banks. Who knows what happens but wealth management has not been the cash cow banks thought it would be.
Each one of us has different comfort zones. Go where you wish but there are great dealer groups that are secure and not aligned to the big 5, have a good and open APL and help with your business without interference and will be around in ten years. The reality is that its the people at the coalface that make the difference, not the brand so ignore the current noise and be happy. Sure hate to be in one group at the moment.
Nice Ben…I hear the same actually. I’m on the verge of leaving a non-aligned group to join an aligned group. At least I know the new dealer will still be around in 10 years, not so sure about the one I’m with and frankly I don’t want to become an unsecured creditor fighting for my unpaid adviser revenue. So there you go.
It looks like a better outcome for me and the clients. and basically, what’s the difference between an aligned group and a non-aligned group that still wants to control everything and sell their product…none.
I broke away from MLC 10 years ago. Wasn’t easy. Two of my friends broke away from CML at the same time. The 3 of us set up our own dealer group. We were the second AFSL to be issued when the industry got re regulated at that time. We have never looked back. EVER!! We now control our own destiny. The dealer fees we charge ourselves are much lower than large or small dealers. My advice to anybody thinking of doing this is to not listen to all the people saying it costs to much or it’s unsustainable. That talk generally comes from those pushing their own barrows or people that just have no idea. Once my clients realised I was independent they starting showing me how they had more funds that they were prepared to invest. They never told me prior because they didn’t want it all in MLC.
Personally I would prefer to be 100% independent, but I also listen to my clients and many of them feel comforted by my association with a large financial institution. Sometimes I think this is lost in the debate about independence and product replacement. Those of us in the profession read the Commonwealth FP stories and feel sick in the guts. But the average person on the street has no idea about these issues, and prefers brands they know and trust. That’s just my experience. But interested to hear more from those who have made the change.
Financial advice practices from large dealers have always been breaking away from the parent. Wether they become self licensed, join an “independent” group or set up their own this is not new behaviour nor out of the ordinary. It’s the fairly typical ebb’s and flows of the industry. No ground breaking information in this article sorry.
Small independents like Dover however with their low and unsustainable dealer fees will not survive in the long term. They simply don’t have the resources and infrastructure to keep up with the monitoring & supervision requirements imposed on dealers. I doubt they get through any type of ASIC probe. We saw this with AAAFI last year.
We moved away from a large Dealer group last year to Dover Financial Advisers ( Independent) it is fantastic , can not recommend them highly enough,
Not really that hard to predict considering how useless and incompetent Nab & Anz are. Not that the other big dealers are any better. Massive dealer fees. Restricted to High fee products with performance fees that are clearly stacked in the dealer/manufacturers favour.
As many predicted a while back, once the fear has gone, the mighty thinkers will return, some sooner than others, depending on the offer they accepted initially.