Advisory practices focusing more on high-net-worth clients to the exclusion of average clients has been one of the major effects of the Hayne royal commission, says an adviser.
Speaking to ifa, More4Life Financial Services principal James Walker-Powell said the royal commission has to a large extent been the death of cross-subsidisation of better fee-paying clients to lesser fee-paying clients.
“The advisory practices are realising that they cannot provide real value to those who are not paying a commercial fee, and thus more focus is now on high-net-worth clients, to the exclusion of the masses, making financial planning a luxury item,” Mr Walker-Powell said.
Mr Walker-Powell said that when the AMP board and senior management came under fire from the royal commission, there was an underlying enjoyment from advisers that senior management from financial services companies were finally being called out, rather than what they had always done – that is to push the problems down to the advisers and advocate blame on their troops, rather than take any responsibility themselves.
He said the topic of ‘fees for no service’ that was brought to the attention of the royal commission has put the spotlight on advisers, leaving clients questioning the value for the fees they are paying more than ever before.
“This has resulted in clients who were not getting value for money leaving their adviser and either going it alone, or looking for alternative advice options, such as what they may find in an industry fund network,” Mr Walker-Powell said.
Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.
You can contact him on [email protected].
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