Throughout the course of the last few years, I have spoken to about two dozen advisers who were unhappy with their current arrangement with their licensee. In most instances the licensee was either owned or operated by the big banks or AMP. To be fair, they are about 80 per cent of the market so it would only be natural they are more represented. Common grievances include things like not developing my business and irrelevant compliance excesses, but the overall main theme revolves around the fact that they either push product or restrict strategy.
In an ifa editorial inappropriately named “Game over for insto-aligned advice”, it was stated that the licensees were helping Authorised Representatives to leave their current arrangements and set up new AFSL’s. It then went onto discuss how this was a strategic smart move for the banks as they could then provide dealer services that no doubt would include the very lucrative funds under management. This would appear to be the same old strategy under a different guise straight from the play book of the old British empire… give them a bit of power but not too much.
Personally, I believe the banks have hitched their wagons to robo advice or fintech to be their saviour. Let’s be frank, through such measures they can build in stealth their algorithms and don’t have to deal with meddling advisers who may disagree with certain aspects of their distribution strategy.
Back to the conversations with our disgruntled advisers. After hearing the usual platitudes of wanting to put the client first and delivering an advice service that meets the client’s expectations, it becomes very obvious that the only way that can occur is within the right environment where the adviser controlled the advice delivery. If the client needs to buy a property then that’s what you need to recommend, and a plethora of other examples come to mind. In other words, you need to go and solve the problem.
Then as the enlightened drive home the mind invariably wonders about things like the actual effort to move the clients, having to set up a new business structure, which may or may not include their own AFSL, and then there is the realisation that the heroin they currently enjoy in one form or another will stop. Thoughts then become “maybe these guys are not so bad and it would be better for everyone if we just continue as is”.
There has been an immense amount of regulatory and technological change in our industry in the last decade. This has only been matched by the chorus of platitudes from advisers on how they work for their clients and meet their expectations in a challenging financial world. If advisers really broke down their businesses and pulled them apart, would they meet the lofty standards of the rhetoric or would they be found wanting?
This war on “fair dinkumness” needs to be waged by the advisers, as the larger licensees can’t and won’t be able to do it.
As soon as advisers are ready to make difficult decisions for their own business this will then flow on through the advice process more generally. The improvement of the delivery of financial advice is the only thing that will improve the standing of the industry within the broader public.
Rhetoric and the constant need to make law changes for the effect of “looking busy” just doesn’t cut it, nor does it get results. The industry gets bogged down in self-absorbing arguments such as “fees verse commission” to try and show they are more enlightened than their colleagues. The only real measurement that matters is what value are we delivering our clients and do they recognise, hence, pay for it? Currently the scale of this public recognition of that value is about 20 per cent, which really says it all.
The financial advice industry in the most part today is still some form of distribution. I have always had the view that an adviser could be aligned but still provide good quality advice to clients.
My personal approach was to not be dictated by anyone how I delivered my advice, but I was not naive enough to think good advice could not be provided through this structure. However, when you are talking about KPI’s and other measurements that are about gauging the success or otherwise of the distribution model from the institutions perspective, then the provision of advice becomes a secondary consideration.
In the past these pressures have lead to poor outcomes for clients and the management structures that have overseen these disasters have profited without penalty. Ultimately, the power rests with those whose goal is distribution and other matters are secondary, therefore their decisions will be made accordingly and the subsequent consequences follow.
It is time for advisers to stop the plethora of dribble and get on with action that will improve the quality of advice to the public. These changes need to be real and sustainable for the industry to be able to survive.
Advisers need to take responsibility for what they are or are not delivering to their clients. If you honestly believe that your existing model is delivering to clients then be loud and proud, but do it through actions not discourse on social media. If changes need to be made to how you deliver advice then get on with making them. Go and discuss what is involved in becoming self licensed, or go and discuss with a credible player who is in essence non-aligned and has the same ethics and principles as you do.
What sort of advice business do you run and what sort of business do you say you run?
Robert Coyte is CEO and representative at Shartru Wealth
Hi Robert
Thank you for your honest assessment of your industry which, I suspect/ hope, parallels those of close observers and many in financial advice who are still looking for the necessary axis-tilting changes you speak of. No doubt others will disagree, sometimes vehemently, and that’s ok, too. Some are personally offended, which usually says much more about them than anything else. Either way, real change begins with such soul searching and the critical analysis by others – so I commend you on your desire for the transformation of the industry’s core values and aligned actions, at an institutional and individual level.
You’ve raised similar concerns in the past so I trust you continue to raise a loud, clear and persistent voice. Intermittent beats of a drum do not a war dance make. Surely, there’s more than one canary in the coal mine so how are you joining with others to ring the clarion bell?
As a consumer, interested observer, previous financial services professional and now business adviser working with a spectrum of like-minded professionals, I’m keen to know how a) your group has practically distinguished itself from your peers, and what that means for your advisers and clients and b) what other changes do you envisage you and the industry need to make to become truly client-centric. I invite you to PM me on LinkedIn or give me call. Cheers.
Wayne my personal position is the industry is where it is as a result of what licensees are prepared to accept. If licenseees maintain and enforce the standard everything else will follow.