“After a fiasco, we should have the CEO of the bank put their enforceable undertaking between their teeth and crawl naked to deliver it to ASIC,” Alex Erskine, former ASIC insider and founder of Erskinomics Consulting, told yesterday’s 15th annual Wraps, Platforms & Masterfunds Conference in the Hunter Valley.
Speaking to a room of nearly 200 delegates, Mr Erskine said vertical integration prevents institutions from having meaningful conversations with customers.
“I think it’s a constraint because there is so much to defend when the empire is so large,” he said.
“It’s not clear that the industry is understanding the problems with vertical integration and is making a clear case for change.”
Mr Erskine said that being vertically integrated does not stop institutions from making proposals; it stops them from making convincing proposals.
“If you were only running planning, or broking, and they were not related … but when you have the whole lot, everyone’s focus is diffused into how to measure all this,” he said.
“Being a vertically integrated industry, it’s not clear what the major banks are actually getting at.”
The arrogance and contempt that the executives of the banks and the industry super funds have for the financial planning process are the core problem not vertical integration in itself. How can efficiency gains and accountability be a bad thing. It all started with Storm and we still have not weeded out the core issue – instos acting for themselves not for the client. Not only have they proven that they cannot be trusted to self regulate the politicians have allowed these same instos to manipulate the regulatory debate.
So we are looking for bank executives who feel a sense of shame at their actions? Oh – there they are – next to the unicorns and dragons!
Utopia would be achieved if all those who provide advice were IFAs.
In my view, the future becomes brighter as IFA advice businesses are past on to the second generation.
The great legal and accounting firms have been going for 100 years.
The banks providing advice “apprenticeships” are probably going to go on forever.
What a lot of tripe! There have been issues but I wonder how much good has also been done with clients who otherwise would not have insurance, saved into super, or had other worthwhile advice from VI groups.
I am an IFA but even I can see through the nonsense and noise, whereas apparently these self promoting ex-ASIC types have difficulty doing so.
And rather than just picking on banks, what about directing these sceptical comments to the absolute VI of all, the ISA!!!
You’re right, GrumpyOldMan. I am the one having the conversation with my clients, not the institution I work for. Given that I frequently provide advice on products other than those owned by the parent group, VI is possibly not the monster it is being made out to be. However, where you have most hit the nail on the head is in questioning the efforts made by IFAs to hire and train new advisers. I left my IFA Paraplanner role after 3 years to join a bank as an FP because my employer didn’t want to put time, effort and money, into my development. The bank almost puts too much in – the level of monitoring, compliance, training and mentoring has to be seen to be believed. Would I prefer to work in an IFA, yes: I probably would because I get sick of being treated as a ‘second class citizen’ even though I am degree-qualified with an ADFP and 20 years life/work experience. But would I get the same sort of support to establish myself as a planner: not that I can see.
Give me a break. This debate about VI v` IFP has totally missed the point and gone on for far to long.
Should it not be more about the individual adviser. The adviser is the one who should be controlling the discussion with the client and the one responsible for the advice. If the adviser is not knowledgeable or suitably trained and skilled then the advice is always going to be shoddy. Institutions do not have conversations with Clients, Individual`(The adviser ) has conversations with clients. If we are not happy with the level of training given to new adviser or their knowledge, stop whinging and do something about it and hire them.
If the adviser at a VI business is not strong in their belief of what is good for a client maybe then that is our fault as a collective for not providing sufficient support and mentoring.
Time has come to change the discussion away from them and us. We are all in it together and this Bickering does not do any good for anyone…….
I totally agree that bank management should be held accountable for vertical integration. So should management of industry super funds. Or any financial organisation that charges a client to use their product for that matter
Most of the vertically integrated businesses are also competing with their platforms in the broader IFA market so I assume there is generally some level of interest in building a best of breed solution. Wouldn’t the bank client therefore benefit from this?