IFAs expect more banks to withdraw from owning dealer groups
Members of the non-aligned advice sector believe more banks will follow the path of Suncorp and opt to move away from owning financial advice dealer groups.
Speaking to ifa, Roskow Independent Advisory's Matthew Ross said he believes the banks will pull out of owning financial planning dealer groups for three reasons.
The first reason, Mr Ross points out, is that consumers are "far savvier" than they were in the past and are no longer "easy money" for the banks.
"Consumers are able to recognise when someone is 'selling' them a product as opposed to giving real advice," Mr Ross said.
"The second reason is the 'best interest duty' is going to prove too high a hurdle for the banks to adhere to.
"Finally, financial advisers are going to be forced to migrate to independence because we have stronger ethics and are far more driven to put clients' interests first," he said.
Executive director of Treysta Wealth Management Mark Nagel told ifa with a growing movement of advisers pushing back against the "product flogging" culture of the large financial institutions, it is making the idea of hiring advisers far less appealing.
"If the adviser resistance gains momentum, will large financial institutions be enthusiastic to license hundreds of advisers?" Mr Nagle asked.
"In the absence of any ability to grab margin on in-house product I don't believe so, and we may see more instos exit the space."
However, Andrew Stewart, a senior partner of non-aligned financial advice firm Stonehouse Group, said the banks would never let go of their "rivers of gold".
"Why would the banks give up a distribution network they control? Bank-owned dealer groups control the approved product list (APL) which ensures the underlying bank product's success," he said.
"Without the distribution ownership and APL control the bank product would need to compete on a level playing field. Their vertical integration with the supply chain ensures the banks' success at every level."
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