New findings from Roy Morgan’s Superannuation and Wealth Management Australia report show that in the 12 months to December 2014, Westpac/BT had the highest rate of in-house product recommendation, with 82.4 per cent of people using a Westpac Group financial planner ending up with a Westpac/BT product.
This represents an increase of 3.4 per cent from the previous year.
CBA had 71.3 per cent of its customers in its own product, which was up from 64.2 per cent 12 months ago, while AMP placed 68.4 per cent of its clients into an AMP product.
ANZ had the lowest rate, placing 47 per cent of customers into its own product.
Roy Morgan said this figure was consistent over the past four years and it remained to be seen whether the FOFA legislation would impact these numbers.
However, the market research house added that “it is important to note that often these products are master trusts or wrap accounts, which may contain funds managed by other fund managers”.
“It remains to be seen whether the Future of Financial Advice (FOFA) legislation will have any impact on these numbers, as the large licensee groups are generally restricted to recommending funds from their Approved Product Lists,” Roy Morgan said.
The survey also showed that advice clients remain in the dark about the independence of their advisers, with many still unaware about institutional ownership.
The research found major licensee groups owned by an institution but branded differently continued to be viewed by clients as independent, despite the ownership details, in line with figures from the last survey.
Examples include Commonwealth Bank-owned Financial Wisdom, where 54 per cent of clients surveyed believed the business was independent.
The same was true of NAB-aligned Godfrey Pembroke and ANZ’s RetireInvest, with 51 per cent and 46 per cent respectively believing they are independent.
The research house found that clients were also confused about identifying independence when a planner comes from a major fund manager, reporting that a quarter of AMP members consider them independent.
I read a quote yesterday along the lines that professionalism isn’t how you get paid or what you do for a living, but its about how you do it.
For this discussion, it could also apply to who you are licensed with.
The current AFSL structure come around partly as a result of legislative requirements from ASIC and its predecessors. Maybe we’d be better served by a system were financial planners were individually licensed similar to the way accountants are.
The problem is that ASIC couldn’t cope so it will never happen.
Anti V-I, the reasons I left a Big5 aligned AFSL wasn’t to do with issues of being controlled by the Dealer. On the APL we had 10 or 12 insurers, on of which was aligned to the AFSL. We did some business with them, but only were it suited the clients needs. Most clients we placed elsewhere. For investments/super, we had the AFSL aligned platform product, but as its widely used by many non-aligned groups I don’t see that as an issue. And while we used the admin system provided by one of the Big5, we rarely used any of their investment products preferring a spread of ETFs, independents and boutiques.
Now that I’m at an AFSL that has no product ties, and I’m still using the same insurers and super/investment providers that I did previously. In my opinion they suit the needs of my clients, and allow me to meet my obligations under the BIT just as much now as they did previously.
Ah AV! Your anti paranoia drugs have worn off I see. You’re just showing your ignorance and perpetuating a view that is far from reality regardless of what the voices in your head are saying.
Jimmy, you don’t need to own something to control it. Ask the citizens of any dictatorship
Bob Eyes, something wrong with your vision, get down to specsavers. The bank may own the AFSL, but they do not own the firm, they do not pay the adviser (apart from the legal requirement that the AFSL must collect the revenue from clients), and they don’t own the adviser. The owners of the business have the ability to move from one AFSL to another if the feel that they aren’t being served by the existing AFSL. I left an AFSL aligned to one of the Big5 and went elsewhere. My choice. And as to the part about the bank paying the adviser, if I don’t meet with clients and write or maintain business then I don’t get paid.
Cheers Sean but can you or anyone name one suburban practice owned by a bank. Licensed yes, owned no. A big difference. I agree whole heartedly with you that none of it prevents great advice and most of the talk about it as an issue is a beat-up. Practitioners including our practice, who are licenced via banks or large insurers don’t shy away from telling clients of the relationship despite the supposed shame we should feel. That disclosure forms part of the very first conversation with clients. Its just most clients see it as the non issue it is.
Well actually TD, financial wisdom, Godfrey Pembroke, millenium3,etcetc are generally operated as small offices, and all owned by banks. Not to mention Charter and the rest of the AMP and fund/insurance company licensees.
Bob may not be able to work out that the banks don’t own those businesses but he is right about the ongoing lack of transparency from institutionally aligned firms. Unlike bob, I agree that it’s not as big a problem as he thinks. I’m not worried. I work in a bank, it’s clearly labelled on the door and people walk in and ask for help. Nothing at all stopping me from giving them good advice.
Bob you are talking and perpetuating complete BS. Name one Bank that owns a small firm in the suburbs. You’re talking out your backside.
Is this the preferred model?…..’Non bank/Non Insurance company owns part of practice, provides finance for practice, provides IT for practice, has nice relationship with non bank non insurance company fund managers, signage out front says independently owned, FSG has some obscure licensee listed and is chock full of crap about not belonging to a bank or Insurance company, advisers in the FSG claims they’ve seen the light, funds only go via nominated white label platform….Blah Blah Blah…
Dave has hit the nail on the head.
Jimmy Neutron, bank owns AFSL, bank owns firm, bank pays adviser, bank owns adviser…same same. Its all a distribution play. Let me guess, just because the AFSL is owned by the bank then the advice must be indpenednt, why doesnt the leagkl system see it that way then…conflict..and the firm will be incentivized to sell the paretn product, but i guess you think that doesnt happen either. So a consumer walks into a firm licensed by a bank and gets sold the banks product and they have no idea the bank owns it…good advice? fair? what im suggesting is transaparency thats all.
Bobs Eyes, either you’re just being provocative or you’ve got no idea. Being licensed by a particular AFSL aligned to a bank and being owned by the bank are two entirely different things.
Great comment Dave. Agree with that 100%. There was some discussion back in the day that wrap platforms etc were purely administration vehicles and that they should be excluded from the classification of a financial product. That didn’t work because people in govt don’t understand the differences between the platform and the underlying investments. You could have BT Wrap as the admin platform but have it stuffed full of independent/boutique funds if you wanted. BT get the admin component but no investments to manage.
The focus on this topic really concerns me. We should be a profession focused on ADVICE, yet all the chatter from outsiders and commentators and half our advisers is about products in one way or another.
Barring any spectacularly crap products, the vast majority of products are similar enough and as such the value added to a client over a decade from my advice would only change negligibly if I used a different product.
My strategic advice is where the value is added, the product is almost an irrelevant final piece of the puzzle. Being insured is better than not being. Asset allocation decisions outweigh underlying share/manager choice, and so on and so forth.
Shouldnt we be educating the public (and the less experienced amongst us) of this fact, rather than always going on about who’s using which products…
I’m a Ford man, but not stupid enough to think their engineering is anything more than negligibly different to a similar Holden…
Nackers – the problem is consumers walk into an institutionally owned financial planning firm and they have no idea of the ownership, so they get flogged a bank product not knowing that the bank owns the small practice in the burbs. If i walk itno a big CBA branch i know what im letting myself in for. The insto logo should be displayed alongside the firms logo everytime its used, problem solved for confused consumer.
APLs have broadened at most of the instos which is why it is so amaziong that this shit is still going on. Would have to be an inhouse complaince officer at a bank reading this lol
Wasn’t supposed to be a cheap shot, Andrew. Just stating the obviously.
Clearly bank advisers are going to keep recommending their own products when they are the only thing on the APL. Advisers are going to continue to seek employment with banks due to the generous salaries and bonuses schemes.
It is a vicious cycle.
Wow what a surprise. I used to be a Westpac planner and the only super/investment product on the APL was BT Wrap.
But of course this product is in the best interests of all clients they come across.
nackers how so right you are, I too am sick of this sort of crap.
Scott cheap shots don’t help anything
So this is a surprise?? – When a client goes in to a bank, they generally expect to be sold that banks product – if they wanted independence, then they would surely go and see an IFA. This is no different to loans – when you go to Westpac for a loan, you would expect a Westpac loan and if you wanted independence you would go to RAMs or Aussie etc. I am tired of hearing this crap – I am in IFA and my USP is that I can use any product I wish and I use this to my advantage when I speak to my clients, but I don’t waste my time whinging about what I cant control
Surely this doesn’t surprise anyone. Knowing quite a few bank planners the only products on their APL are their own. They can apply for a one off approval to use another product but need to jump through hoops to get it approved so don’t bother.
Can afford to pay bank planners a good salary and very generous monthly bonuses because they easily make it back through their own products…