Yesterday Mr Heath and former MLC CEO Steve Tucker officially launched the company, announcing their intention to target high net worth clients and heralding that “the future of wealth management is independent”.
Speaking to ifa yesterday, Mr Heath said both within the industry and among investors at large there is a palpable demand for independent advice that was ripe for the picking.
“When we looked at the marketplace, a high-quality, professional, independent advice provider of reasonable scale did not exist,” he said. “We think there is scope for a company that is large enough to invest in very high-quality support, while remaining independent.”
Mr Heath said that while the launch of Koda is “not a criticism of vertically integrated models”, it does recognise that the landscape has shifted in favour of the non-aligned sector.
“The vertically integrated model serves a purpose and up to a point it serves it well. Koda is not a criticism of that model, it is an acknowledgement that for a particular group of clients – and we are specifically targeting high net worth clients – they are looking for advice that they are certain is given in their best interests and their best interests alone,” he said.
“What structural independence does is take away the incentives for conflicts to occur.”
The industry needs to ensure it is meeting the best interest duty through self-regulation and sound business models, rather than having a regulator pointing out breaches, he said.
Advisers joining the group will take equity stakes in the business as partners, meaning the firm is more akin to a legal or accounting firm in its structure than a traditional dealer model.
“This is the model employed by the large professional services firms and, quite frankly, is a model that will help us move towards being a profession,” he said.
Koda advisers will be required to meet the Corporations Act definition of independence, including rebating risk commissions and removing all ties to product providers.
Can I buy the same advertising space as they guys. Haven’t seen anyone else get quite a run like this for a while.
Oh well it’s all fine if you’re targeting high net worth…Not all of us have that luxury nor do most the public. Now if the creators of FoFA were fair dinkum aren’t we supposed to be seeing lower cost advice being provided to more Australians? Only 1 in 5 people seek advice according to Medcraft. He thinks it’s because they can’t trust us. I would suggest its because they can’t afford us.
Now we get a self-promotion from a firm saying they are the shining light and example of FoFA working well. The way I see it, it’s a perfect example of what’s all so wrong with FoFA
This is the model employed by the large professional services firms and, quite frankly, is a model that will help us move towards being a profession,
Amen to that brother.
I should have placed a patent on my business and advice model! I would argue that this model has been employed by small professional services firms since 2004!! An epiphany ten years in the making!