A senior executive with Australia’s largest vertically integrated financial planning business has predicted cross-subsidisation will be stamped out as consumers twig to the value of advice.
Speaking at a roundtable event to launch Lonsec’s co-regulation white paper, AMP executive director, financial planning, Steve Helmich said debate over vertical integrated business models often neglects the long-term picture.
“Whenever you ask someone what they would pay for something and they don’t know what it is, no wonder you get a low-ball answer,” Mr Helmich said.
“We’ve got a job of selling the value of financial planning and the value of advice and what it can do to help change people’s lives. And then I think you’ll find the cross-subsidisation will go over time because consumers will understand what they do have to pay and will value it more.”
The former FPA chair said that both larger licensees and smaller players have an important role to play in growing the number of Australians receiving financial advice.
“I agree that in order to really sell the value of financial planning to the consumer we need different models,” he said.
“We need big players and smaller players. Consumers want choice, so we do need that in order to be successful, and you can’t have failures anywhere along that chain.”
Addressing the same roundtable discussion, current FPA chair Matthew Rowe said separating financial advice from product manufacturing would help sell the value financial planners offer and bring an end to conflicts of interest.
“It is my hope that [the profession] will move through short-term incentivisation and remuneration practices that lead to poor cultural outcome,” Mr Rowe said.
“It’s my hope that the leaders within industry and the profession would actually see that there is a benefit to this cultural change and that they’ll get behind and back professional standards.”
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