Claims that IOOF’s proposed acquisition of SFG Australia spell the beginning of the end for non-aligned advice are wildly exaggerated.
For the past decade, those who monitor the headlines of the daily financial services trade press will have heard, primarily, a story of consolidation. Many a financial adviser has regaled ifa with tales of institutional dealer group BDMs and the tempting paycheque offers they have wielded in recent years – and indeed, many formerly non-aligned practices, as well as mid-tier licensees, have opted to take the money and run.
It is understandable therefore that many readers and commentators saw IOOF’s takeover bid for Shadforth Financial Group parent company SFG Australia as the straw that broke the camel’s back and a symbol of the never-ending story of market consolidation.
For example, boutique practice principal Neil Salkow of Roskow Independent Advisory issued a statement to the press in response to the takeover bid, suggesting that independent advice "is on the brink of extinction".
Mr Salkow’s comments were indicative of the mood immediately following the IOOF-SFG announcement among the non-aligned financial advice community. And as a profitable and innovative non-aligned firm – who was even once the recipient of an “independent dealer group of the year” award from one of ifa’s competitor publications – there is an element of sadness attached to Shadforth’s movement into the “insto-aligned” bracket, to which we are sympathetic. Despite SFG’s head of advice Nick Bedding telling us that the response from SFG advisers to the deal has been “overwhelmingly positive”, there is no doubt some mixed feelings deep down among these practitioners, who are likely to have sought out that particular licensee in part because of its non-aligned nature.
However, this funeral atmosphere among the commentariat belies the great number of non-aligned financial advice licensees and practices that are still in business and reflecting the highest levels of industry professionalism. Submissions have recently closed for the inaugural ifa Excellence Awards, an awards program we have launched to help shine a light on these businesses and help educate the consumer about the non-institutional options at their disposal. Given it is the first year of its existence, and given the ludicrously busy schedules of most non-aligned practice principals and licensee execs, we were delighted to receive more than 300 expressions of interest – a testament to the fact that the non-aligned sector is alive and well. Like Mark Twain’s infamous obituary, tales of the death of independent financial advice are wildly exaggerated.
In the course of the submission process it became clear that many non-aligned firms do not have the luxury of PR and marketing machines, as the institutional licensees do. And it is precisely for this reason that the “brink of extinction” myth is so widespread. Whenever a listed institution makes a play for a financial advice group, it is trumpeted to the ASX and sent promptly and conveniently to journalists’ inboxes. However, when a firm tries to extract itself from institutional ownership a press release can be tricky and many face exit fees or gag orders that complicate things. ifa is speaking to a number of groups currently going through this painstaking process or thinking of making the plunge, and encourages others thinking this way to get in touch.
Evidence of the resurgence of non-aligned advice came from an unlikely source yesterday, when former MLC boss Steve Tucker anticipated the future is independent. Speaking to the Financial Review, Mr Tucker said FOFA had changed the playing field for consumers and that “the theme of independence is emerging very strongly”.
Admittedly Mr Tucker has just bought into a listed investment company and is probably looking for IFA distribution, but the trend is genuine and can no longer be denied. Those of you on non-aligned licences or those that hold your own – know that you are not alone. Those that are on insto licences and not satisfied – know that you have options.
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