Speaking at a non-aligned advice networking function in Sydney last week, Independent Financial Advisers Association of Australia (IFAAA) president Daniel Brammall said he is seeing a marked increase in queries about structural independence, especially from younger advisers.
“We are seeing the current climate influence the number of calls we get from both consumers and from advisers,” Mr Brammall said.
“One of the [typical enquirers] is someone who has been a para-planner for a while – a young he or she – and who wants to start to become an adviser, but they don’t want to do it for the institutions because of what they perceive to be conflicts.
“These kids are pretty well educated, they are naïve, they are green around the gills but they are not happy with watching the advice process unfold.”
At the same time, Mr Brammall said the IFAAA is also seeing a number of middle-career stage advisers looking more seriously at taking steps to comply with the Corporations Act definition of ‘independent advice’.
These enquirers are often from larger licensees and are interested in attaining a “professional distance” from fund managers, he suggested.
Addressing the same event, Boutique Financial Planners president Dacian Moses and AIOFP executive director Peter Johnston both said they have also seen an increase in queries from insto-aligned advisers interested in finding out more about the business models on offer.
“I would agree, I think there is more interest for advisers wanting to obtain their own licence and I am all for the client asking intelligent questions about who controls their adviser,” Mr Moses said.
Mr Johnston said the CBA financial planning scandal has led to the change in attitudes towards independent ownership from both advisers and consumers.
Lets be honest it makes sense to be independent. The only reason planners do not believe it does is due to fear, worry and the logistics of managing change. The whole purpose of the banking system are doing it’s job to make you feel safe as an adviser under their network. “They have your back”. I can assure you many aligned planners out there know if something goes wrong, they really do not have your back. After working at four institutional firms and witnessing all i have, I couldn’t feel anywhere more unsafe for my clients and my business.
I was offered a job at a bank – only to be then told that I only have in-house products to recommend…. With everything we hear in the media, I literally laughed and said thanks but no thanks. Of course us Gen Y’s don’t want to get caught up in the hangover of conflicted advice – start fresh and help change the way our Industry is seen, I say.
There’s still the issue of compensation. ASIC is uncomfortable about small licensees ability to cough up. Given the rise and popularity of class actions and just plain suing for losses, I would be uncomfortable rushing for the independence door until these matters are resolved.