Vertical integration good for advice access

***Updated*** Vertically integrated financial advice models can be a boon to clients who otherwise wouldn’t be able to afford to speak with an adviser, according to a former CBA and ASIC lawyer.

Speaking at the 2018 Wraps, Platforms and Masterfunds conference organised by ifa sister title InvestorDaily, The Fold Legal senior associate Simon Carrodus said vertically integrated models, such as intra-fund advice, can benefit consumers.

“I like the idea of intra-fund advice. We can give some advice at low or no cost on the specific product that you’re already in – you’re not asking for advice on which product, you’re asking for advice inside this product,” he said.

“I think there will always be a place for a vertically integrated advice model, and without it we’d have a real problem with access to advice.”


Mr Carrodus said the lower cost of advice provided under a vertically integrated model was a positive for clients, but acknowledged that advisers in these models should be required to “declare upfront their bias”.

The banking royal commission will turn its attention to superannuation and intra-fund advice next week, which ifa will be covering in a live blog commencing on Monday.

Update: Mr Carrodus has since clarified his remarks, noting that vertically integrated businesses "made their own bed with numerous failures over many years" and a better model is needed to protect clients' interests, but complete separation of product advice and distribution may reduce the afforsability of advice to "most Australians".

“I completely understand the calls for separation of product and advice. I am not opposed to it. But we have to figure out a way to ensure that financial advice remains affordable for most Australians, rather than being reserved for high net worth clients only,” he said.

“Intra-fund advice helps with access to advice but it is a limited service, not a complete solution. Where intra-fund advice is provided, there is a conflict between the interests of the adviser/fund and the interests of the client. For this reason, intra-fund advisers are not allowed to advise clients on their choice of product.”

Vertical integration good for advice access
The Fold Legal, Simon Carrodus, vertical integration, vertically integrated, superannuation, intra-fund advice
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