Institutionally-aligned advisers will struggle to master an outcomes-based client strategy, a recently non-aligned executive has suggested.
In an interview with ifa, MyPlanner Australia managing director Philippa Sheehan said the increasingly popular philosophy of outcomes- or objectives-based advice is less feasible to implement in the institutional environment.
Ms Sheehan – who recently left the IOOF network to head up the non-aligned MyPlanner group – said that while it is “possible” for aligned advisers to provide truly objectives-based advice, that it is “more difficult” within these business models.
“There are other factors and divisions that perhaps come into play when providing advice within that model,” Ms Sheehan said.
“A licensee may say they provide objectives-based advice but then their APL may be limited to the products of the institution that they’re owned by.”
Many institutionally-owned dealer groups maintain a focus on risk profiling or product recommendation, which are not in the spirit of true outcomes-based advice, she said.
However, while greater freedom to pursue this advice strategy may be a benefit of joining an independent group, Ms Sheehan also warned that wannabe IFAs must be prepared for additional costs associated with greater choice.
“There is always that challenge [for licensees] around profitability without product,” she said. “The challenge is for financial planners to understand that if you’re going to move to an independent or privately-owned licensee you are going to have to pay more.”
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