Speaking exclusively on the ifa Show podcast, Mr Benbow spoke on how commissioner Kenneth Hayne didn’t mention anything in his final report about dismantling the vertically integrated advice model.
He noted that commissioner Hayne recognised the difficulties of dismantling the vertical model and thinks he’s trying to let the market decide on it instead.
“They haven’t dismantled vertical integration but what does vertical integration look like in a world where you have to declare your independence, which is not just for the big six. It’s for many small self-licensed businesses that have an MDA of some form. They’re not independent by that terminology,” Mr Benbow said on the podcast.
Further, Mr Benbow referred to the letter of independence from the adviser as recommended from the Hayne commission as “a market-driven force”.
He said that’s effectively what’s happened in the UK, where there is a highly-scaled vertical integrated cost of advice, delivery is a lot lower and you’ve got a more expensive independent market.
“What will the consumer want and will they be willing to go to an AMP or a CFS of MLC without the independence? But there may be a different proposition is that advice is a lot cheaper in that model to justify or to attract clients than it is in the IFA channel,” he said.
“Do we get there anyway? I’m not sure. Does the big six start to invest in highly-scalable salaried channels to lower the cost of advice substantially and make it much more streamlined? What’s the utility or what’s the benefit as a self-employed adviser remaining in the big six?
“Because if every conversation you’re saying, ‘Not independent but I’m going to recommend you into these other products which are not tied to the mother ship’, what’s the point of that? There’s a lot of questions for me that remain unanswered, and I think nobody knows.”
To listen to the full ifa Show podcast with Angus Benbow, click here.
Vertical Integration was considered by Hayne as too difficult to change or do anything about??? because??? why??? I’ll take a guess… The big 6 have so much money and power that they have lobbied all sides of government, ASIC and Hayne. This has influenced Hayne to do and say nothing! The professional unbiased advice, that clients should receive; remains captured by the big 6. Advisers remain as disguised sales distribution arms of the large product manufacturers. Of course when things go wrong? the licensees’ who are impostors for advice blame the adviser! What a neat little scheme this is!
[quote=Anne Davies]This is why we’re all stuffed…..I can work at AMP and call myself “Bob Smith You Beauty Planning” and place a small logo on page 200 of my website now. I hand out a 400 page FSG listing payments from AMP so yet another one line sentence saying “I am not independent I use AMP or XYZ for licensing support” will not change the landscape at all. In return for paying $500 bucks for software etc etc etc etc via AMP where independents who can’t even claim they’re independent pay $15,000….then clearly most advisers will take the risk that someone might ask. By 2020 the deeds of AMP will be forgotten. The only thing that will change is existing large licensee’s will be owned by Japanese Banks and the FPA’s Dante De Gori aka Mr Magoo will be needing to speak Japanese if he wants to survive. [/quote][quote=Anne Davies]This is why we’re all stuffed…..I can work at AMP and call myself “Bob Smith You Beauty Planning” and place a small logo on page 200 of my website now. I hand out a 400 page FSG listing payments from AMP so yet another one line sentence saying “I am not independent I use AMP or XYZ for licensing support” will not change the landscape at all. In return for paying $500 bucks for software etc etc etc etc via AMP where independents who can’t even claim they’re independent pay $15,000….then clearly most advisers will take the risk that someone might ask. By 2020 the deeds of AMP will be forgotten. The only thing that will change is existing large licensee’s will be owned by Japanese Banks and the FPA’s Dante De Gori aka Mr Magoo will be needing to speak Japanese if he wants to survive. [/quote]
he already does started taking classes a couple of years ago
This is why we’re all stuffed…..I can work at AMP and call myself “Bob Smith You Beauty Planning” and place a small logo on page 200 of my website now. I hand out a 400 page FSG listing payments from AMP so yet another one line sentence saying “I am not independent I use AMP or XYZ for licensing support” will not change the landscape at all. In return for paying $500 bucks for software etc etc etc etc via AMP where independents who can’t even claim they’re independent pay $15,000….then clearly most advisers will take the risk that someone might ask. By 2020 the deeds of AMP will be forgotten. The only thing that will change is existing large licensee’s will be owned by Japanese Banks and the FPA’s Dante De Gori aka Mr Magoo will be needing to speak Japanese if he wants to survive.