As the royal commission drags on and new banking scandals continue to mount, the argument for non-aligned advice is becoming compelling, says Powerwrap.
Speaking to ifa, Powerwrap chief executive William Davidson said advisers need to realise there is life beyond the inside of a bank.
"They’ve built up great relationships with their clients – that is, their clients trust them and they distrust the banks," Mr Davidson said.
"So it is a perfect opportunity for them to move and establish their own independent business."
Mr Davidson made the move from Bennelong Wealth Partners to $7.2 billion FUA platform Powerwrap in October 2017.
Powerwrap, he said, offers institutional-level pricing to advisers with high-net-worth clients who have left the big institutions.
The platform counts UBS spin-off Escala Partners and Koda Capital among its major clients.
"The movement to boutique [advice practices] happened in America first, it happened in the UK, and it’s happening here," Mr Davidson said.
"Clients have trust in their individual adviser moreso than they do in the banner that sits across them. The brand seemed to be getting them into more trouble, whether it's Macqaurie going into enforceable undertakings or banks before the royal commission."
The decisions by CBA, ANZ and NAB to exit wealth management in recent years is a tacit admission that the incentive structures for their advisers are broken, Mr Davidson said.
Westpac/BT will continue to hold onto its vertically integrated business model for as long as it can, he predicted.
"And they're just providing additional disclosures. But the problem is that those additional disclosures are embedded in an 80-page SOA – it’s very difficult for people to understand the breadth of what they’re being offered," Mr Davidson said.
It is likely that Australia will go down the same path as the UK by creating new categories of financial advisers such as 'product advisers' and explicit 'sales' roles, he said.
Several firms have been impacted by the corporate regulator’s action.
Super funds must now have a retirement income strategy in place.
Vanguard has called for a complete overhaul of the advice industry.
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