Industry consultant Jim Stackpool has prophesied that a number of financial advice practices licensed by the major institutions will break free, singling out NAB and ANZ as prime targets.
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.”
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