John de Zwart, managing director of PIS parent company Centrepoint Alliance, said dealer groups are deluding themselves if they think they can survive on licence fees alone.
With grandfathered volume rebates set to fade away over time, alternative revenue streams need to be built into financial planning dealer groups, he said.
Centrepoint owns two in-house products – Ventura and All Star Funds.
“Ventura is managed by Russell Investments. We’re not the responsible entity – we have that outsourced to Equity Trustees,” said Mr de Zwart.
“But we do the coordination and management – the selection of who is the investment manager underneath that,” he said.
Centrepoint is also looking at creating some low volatility, outcome-orientated in-house products and has put out a tender to a number of investment firms.
“We’re looking to provide some non-implemented portfolio solutions to our practices before Christmas and then implemented solutions hopefully [in the] first half of next year,” said Mr de Zwart.
Financial advisers should not be in the stock-picking game, he said, and Centrepoint is looking to create products to facilitate that.
But at the same time, Mr de Zwart described PIS as operating in the “independent” space.
“There’s a real need in the independent space for a financially secure, good proposition service model to allow people to migrate away from the institutions back into the independent space,” he said.
“We want to build that business that is going to support them, and a big part of that is being financially strong – and we have to get reasonable margins from providing our services,” Mr de Zwart said.
Of course dealer groups cannot survive on a slice of the advisers advice fee.
It is almost immoral that they should be taking a clip of the ticket for the knowledge that
The adviser shares with the client advice. Now product flogging is a different game altogether,
But call it for what it is ! Can never be called independent conflict free can it.
This new government has promised to respond to the short comings in FOFA by year end.
It will be interesting to see how they classify vertical integration and conflict of interest.
Cmon Arthur make the call now and clear the air for the Mr De Zwart,s who wish to appeal to independent advisers with product solutions.
I am not having a go at you but just giving you some food for thought on identifying your core skill sets and leveraging those for the benefit of your clients rather than trying to be an expert generalist.
Best Regards
Gerard and Teri I disagree with you. I know plenty planners that pick stocks (myself included) however I do not believe it is a core skill set of any financial planner. Have you ever measured your own alpha? Beta is cheap and less risky by indexing.
We have a very professional, well drilled, driven managed investment industry, yes with conflicts and tracking error fears, but good nonetheless. To think you can outdo these guys with individual picks on a regular, repeated and robust nature and not drive additional risks, (eg concentration) into the portfolio of the client then unless you have objective and comparable data over multiple cycles I would not wish to rely on long term wealth creation by an individual planner.
If you are that good at picking stocks why aren’t you in funds management. Even if you prefer planning as a profession, how can you be sufficient across SIS, ITAA etc to provide good service in these areas to your clients. You risk becoming a
Sorry Mr de Wert. I agree with Terri and others. Good financial planners can and do pick good stocks. They are not bound or urged to place funds with an in house product. Often the managed fund or wrap type product will have some very poor companies which are chosen by the various stock researchers.
Completely disagree. Financial advisers can quite comfortably be in the stock-picking game, and be very good at it. Vertically integrated businesses offering in-house products will always have a questionmark over their heads when recommending their own products as ‘best’ for the client.
John
bad effort to recruit lost ground. You are WRONG in your assertions. Time will tell but you can bet vertical integration and those who sought comfort with the big guys have a limited and unhappy time frame. The paint job will fade and the spots will appear again.
Couldn’t agree more! It is very important for groups like PIS to survive in what has become a bank dominated industry. FOFA has driven advisers into bank groups and many of those advisers are only just realising what they have signed up for.
Product revenue needs to be a part of the solution but advice not shareholders need to drive results for consumers
Captains Log: Star date 1995…we’ve gone…back in time…to compare financial planning to post FoFA 2013. We…report that nothing has changed.
If Mr De Zwart is correct (& I am not arguing with him), would I as a client be advised that he is going to promote his ‘in house products’ at the expense of a better product elsewhere- providing of course him even makes himself aware of that other product?
The basic problem still remains- We give advice & the ‘best’ solution for the client just so happens to be we then sell a product that we make money from