Focus on short-term KPIs instead of long-term outcomes is leading bank-owned wealth management businesses to crisis point, says a former AMP exec and business broker.
Speaking to ifa, Connect Financial Services Brokers CEO, Paul Tynan, said scandals exposed within some of the biggest financial institutions are the result of a “clash of cultures” between business managers and the client-facing and investment professionals under their control.
“Why do you think the banks’ wealth management arms are blowing up? There’s one fundamental reason: you are putting bankers with short-term time horizons in charge of wealth managers with long-term time horizons,” Mr Tynan said.
“That clash of cultures does not work within an organisation – it never has. Those in charge are interested in careers inside the bank and the organisation’s short-term KPIs.”
Mr Tynan – a former AMP financial planning and platforms executive – said many with institutional experience have long been aware that this “clash” would lead to problems down the track, as evidenced by the CBA advice scandal and closure of Genesys.
Having recently launched a business which connects Australian SMEs with south east Asian counterparts, the business broker said the short-termism within Australian management culture was holding back opportunities in Asia.
“[Asian investors and businesses] like formal introductions and the relationships take time,” he said.
“They see us as having a business culture too similar to the Yanks – that everything is short-term. It’s back to the '80s.”
The comments come as ASIC has revealed an additional four current CBA-aligned advisers are under investigation for misconduct.
The federal budget will be unveiled in March. ...
Pendal has enlisted Northern Trust to perform a wide range of asset services across Australia, UK and Ireland. ...
New watchdog tasked with overseeing the corporate regulator will deliver its first report by end of July 2022. ...