Following the royal commission from afar, analysts at Global Data said the high-profile discoveries of misconduct in vertically integrated financial advice providers are likely to influence consumer behaviour.
“Customers are likely to think twice about the type of provider they opt for,” said Global Data wealth management analyst Heike van den Hoevel.
“This will drive growth of the independent advice market.”
The analyst also tipped considerable “headache” for the banks’ wealth management arms in advisers moving away from aligned channels and suggested the IFA sector may be a beneficiary of demand from new cross-sections of the community.
“Financial planners are likely to ditch the big four banks (Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking Group (ANZ), National Australia Bank (NAB) and Westpac Banking) and AMP to set up their own businesses,” she said.
“Even demographics that are not typically drawn to independent financial advisors will find themselves more likely to opt for independent advice when they learn their trusted banking partner has been pushing products that are not in their best interest.”
I worked as a paraplanner for an “independent” afsl. All funds when to one fund manager. They had a good model/fee deal arranged and it was a done deal. I questioned it and was shot down…so independent adviser groups are not always better. And they charged they a bull for this ‘independent’ advice.
Independent as in non-aligned, or independent as in actually independent (not allowed to receive commissions or any payments at all from product providers?).
Did anyone explain to them that we can’t use the word independent even if we are?
It might happen all at once anyway through legislation. I fully expect the RC to recommend a complete separation between product and advice.
The really interesting question is how would this be implemented? It could mean a lot of bank advisers suddenly unemployed and a lot of bank advice clients suddenly orphaned.
I also see it recommending the removal of grandfathered commissions (pre 1/7/2013), which appear to be at the root of conflicted advice. If removed, then there will be wide ranging consequences in terms of FP practice valuations/profitability and the financial viability of some dealer groups.
As there should be. If you’re actually servicing those clients there will be no issue as they will just sign a fee agreement.
If you’re not servicing that client you don’t deserve to get paid. Got to get the fossils out for this to get better.