If advisers want to consider themselves on a par with lawyers and accountants, full disclosure of ownership structures is essential, according to Maddern Private Wealth.
Speaking to ifa, Maddern Private Wealth founder and executive chairman Dr Dennis Maddern said bank-owned advisers should fully disclose their ownership structure to clients.
“I think there should be further disclosure in that if you go to an adviser, you should be told that they are 100 per cent bank-owned [if this is so],” Dr Maddern said.
“Accountants don’t have problems with this level of disclosure and they don’t have dealer groups,” he said.
“Lawyers don’t have it and they don’t have a problem.
“If we are going to match ourselves in the same vein as a lawyer or an accountant and seek to walk in that space, then I think the consumer must have the greatest disclosure that you could reasonably give.”
Dr Maddern’s comments come after ifa reported that new business name registration processes are creating havoc for authorised representatives.
“I don’t think ASIC necessarily does things on the basis of bureaucracy or extra work for firms,” Mr Maddern said.
“In the financial services industry – given that we must have greater disclosure for the consumer – what ASIC is requesting is not really a problem,” he said.
Dr Maddern said over 80 per cent of financial advisers are owned by banks or insurance companies, highlighting the conflict this creates for clients.
A client might think they are going to an independent adviser because it has a name like ‘Acme Planning’, but unbeknownst to them that adviser is actually aligned to a bank,” he said.
“You’re going to end up in those bank products because at the end of the day, the advisers are incentivised,” he said.
“It’s not like franchises like Baskin & Robbins – you really need to know who you’re dealing with.”
Mr Maddern added that dealer groups must “get in line” with the rest of the economy.
“Dealer groups get overrides, subsidies on PI cover – all sorts of different benefits now – and I just think they need to get in line with the rest of the economy.”
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