The dark ages, according to Mr Harrison, are a time when institutions make and create product and force people into them, with little regard for what an individual actually needs.
“The AMP announcements are very bad news,” he said, “and it’s a state of affairs that has been largely brought about by oppressive, anti-adviser government reforms,” he said.
Mr Harrison says the royal commission identified that the core of the problems in the wealth management industry lie with banks and institutions but the sanctions introduced before and afterwards mean advisers suffer consequences and bear an ever-increasing burden of obligations.
“To make matters worse, governments, and institutions with big budgets, appear to have also somehow manipulated the rhetoric to such an extent that many people seem to genuinely believe advisers have brought the current set of circumstances on themselves and have no empathy for them,” he said.
He said that in fact, there was scant indication during the royal commission that the majority of advisers was doing the wrong thing, and a great deal of evidence that institutions, including AMP, did a great deal wrong.
“What many people have failed to understand is that AMP and the institutions were largely responsible for the fees-for-no-service debacle, not advisers,” he said.
“For example, when AMP bought back books of clients from exiting advisers that it couldn’t immediately onsell to other AMP advisers, it went on raking in fees from those clients without organising any service. That is nobody’s fault but AMP’s and yet, somehow, most unfairly, the fees-for-no-service issue has still been perceived as poor adviser behaviour. In the simplest of terms, it is wrong to make AMP advisers suffer for AMP’s sins.”
Mr Harrison said that while AMP has refused to be drawn on exactly how many advisers will be forced to exit the industry following the rationalisation of its adviser network, the estimates range from 30 per cent to as many as 80 per cent of its adviser network.
“How does the exit of advisers – who are legally required to work in the best interests of their clients – in favour of direct channels, improve outcomes for consumers? It–s clear that all this will do is push people into products. Is that, sincerely, what the government wants?” he said.
Mr Harrison said the government has mismanaged the financial services industry to such an extent that it has effectively handed institutions like AMP a free pass.
“The fundamental question governments and institutions need to ask themselves now is, how are consumers better off without advice?” he said.
Thank you Mr Harrison & author Mr Mitchell, we need your voice to be our voice, a lot of good honest advisers are suffering due to the likes and actions of AMP and the politicians who manage to miss handle the simplest of tasks. how about a royal commission into politicians their education,codes of conduct,rem numeration, and allowances /claims
MUCH respect for MICHAEL HARRISON and the author James Mitchell. People like these, with a public voice and persona are truly the only hope voiceless advisers (thanks FPA, AFA) have against the all powerful politicians and life companies with their self-absorbed agendas (to get rid of advisers so don’t pay commissions) This will be the end of life companies and they don’t even see it)
Bang on.
Worst thing is advisers are ‘guilty until proven innocent and denied a right of reply.
The current compliance regime is off the charts ridiculous. Clients are not better off.
Excuse me The Truth, how is your argument going to cope when AMP provides Intra Fund advice(sells heaps of product) to a very reduced product offering via directly employed staff?
AMP “TAKING OUR TOMORROWS”
If you are with a dealer group owned by an institution you are not a business owner, you are a virtual employee – they tell you what to do and how to do it. Good for AMP doing whatever they think will benefit shareholders as that is who they work for…
one by one we leave this tarnished industry, be it in body bags or via bankruptcy either way it will be forced on us by the Licensee, whom continues to take Licensee fee’s (No service included) of up to 23% while ensuring our business’s are devalued to point of destruction. Thanks AMP
Management’s job is to manage unintended consequences. The financial services industry lacks capability in management to provide moral outcomes to all stakeholders.
Institutions get a free pass – what’s new?
I recall LIF was released [b]after [/b][b][/b]adviser groups (AFA, FPA) and FSC could not come to an agreement on upfront commissions and clawback periods (ASIC REP413, Trowbridge Report, followed after this initial disagreement)
Awesome work yet again Mr Harrison but here’s one question I’d like to ask what’s become a wretched industry in my opinion – when will it end? And more to the point – when will common sense finally prevail?
When will ASIC start going after the real culprits of this carnage instead of continually pinning small advisers up in their trophy cabinet who probably can’t afford to defend themselves financially against dubious minor misdemeanors?
When will the Government identify that FASEA is compromised in its operation of forcing experienced advisers out of the industry by imposing unrealistic, unfair and costly education standards on them, at a time when they should be in the twilights of their careers, helping their thousands of clients?
When will insurance companies put their hands up and accept their part in the LIF Adviser Remuneration decreases because they knowingly took massive amounts of churned business because it made their new business inflows look so impressive and of course, paid their senior managers and BDM’s such big bonuses?
Michael Harrison is one person I look up to when it comes to integrity in this industry…sadly, he’s in a minority now.
Arent the FPA funded by AMP and the other big players? Why expect them to represent advisers when their true masters are AMP and the big banks?
It is great to see people starting to have a voice it takes courage and commitment to call it as you see it – Hopefuly constructive at the same time
Thanks Michael – great to know that some people still have integrity in this business
you can guarantee that Commissioner Kedava Kenny was requested to wrestle power back to the banks. Would love to see his share register before and after the RC. #insidertradingkenny
never more truer words spoken…and yet there is simply no power to move that mountain. The dirty laundry that insto’s have managed to push down hill into the laps of the humble adviser is simply criminal and unwarranted.
The reason the government is doing what it’s doing is because of the lobbying by the big institutions. They have the money and access to politicians. 25,000 financial advisers are too small to make an impact. Until we start behaving like a union with 25,000 members we won’t have the power. The AMA is a great example of a profession with an ability to lobby well but I guess they don’t have to compete against big institutions like advisers do for the ear of the responsible minister.
Agree with the author’s opinion. In summary once again Management escape without penalty whilst individual advisers are left doing ethics courses. From Managements perspective in Year five the share price will have recovered and these issues will be nothing but a distant memory. On another point I truly do not understand why any financial planner would want to align themselves with these crooks in the first place.