Licensees who think they can survive in the post-FOFA environment without being vertically integrated are naïve, according to dealer group Professional Investment Services (PIS).
John de Zwart, managing director of PIS parent company Centrepoint Alliance, said dealer groups are deluding themselves if they think they can survive on licence fees alone.
With grandfathered volume rebates set to fade away over time, alternative revenue streams need to be built into financial planning dealer groups, he said.
Centrepoint owns two in-house products – Ventura and All Star Funds.
“Ventura is managed by Russell Investments. We're not the responsible entity – we have that outsourced to Equity Trustees,” said Mr de Zwart.
“But we do the coordination and management – the selection of who is the investment manager underneath that,” he said.
Centrepoint is also looking at creating some low volatility, outcome-orientated in-house products and has put out a tender to a number of investment firms.
“We're looking to provide some non-implemented portfolio solutions to our practices before Christmas and then implemented solutions hopefully [in the] first half of next year,” said Mr de Zwart.
Financial advisers should not be in the stock-picking game, he said, and Centrepoint is looking to create products to facilitate that.
But at the same time, Mr de Zwart described PIS as operating in the “independent” space.
“There's a real need in the independent space for a financially secure, good proposition service model to allow people to migrate away from the institutions back into the independent space,” he said.
“We want to build that business that is going to support them, and a big part of that is being financially strong – and we have to get reasonable margins from providing our services,” Mr de Zwart said.
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