Australians remain confused about financial planner independence while the “Big 6” financial planning groups continue to show an overwhelming preference for their own products when advising clients.
These were two findings of a report – Superannuation and Wealth Management in Australia – recently compiled by Roy Morgan Research.
The research concluded that these two ongoing issues have contributed significantly towards the overall lack of trust by the public in financial institutions generally and financial advice in particular.
An earlier Roy Morgan Research survey in March 2011 found that only 28 per cent of the population rates financial planners as either “very high” or “high” in an ethics and honesty category.
However, it is independence, both real and imagined, that remains a key battleground.
“The major licensee groups owned by one of the Big 6, but branded differently to the parent, continue to be largely viewed as independent by consumers despite their ownership, such as Garvan (51 per cent of members view it as independent), RetireInvest (45 per cent) and Hillross (43 per cent),” the research found.
The three are respectively owned by the NAB / MLC, ANZ and AMP groups.
Things are unlikely to improve in the short-term with even advisers tied to the big players often perceived as independent.
“With the recent takeover of Count Financial by the CBA, there is likely to be some confusion as to their status if their name is retained,” said the report.
“It is interesting to note however, that even when the planner comes from a major fund manager, there is confusion over the issue of independence, with a large proportion of AXA and AMP members (33 per cent and 30 per cent respectively) considering them to be independent.
“In the case of planners coming from one of the major banks, the position appears less confusing to their members, as only a very small proportion consider them to be independent.”
With each of the “Big 6” financial planning groups associated with a major funds management group, Roy Morgan Research also looked at the proportions of superannuation products obtained through these financial planning groups that invested in funds that were in the same group.
“Consistently over the past four years, these financial planning groups have been allocating over 70 per cent of their members products into their own managed products,” it said.
“It is important to note that a proportion of these products are in fact, master trust or wrap accounts, which are likely to include funds that are managed by external managers.”
AMP (78.9 per cent) have the highest proportion of their members’ products being directed to their own products in the latest period (down from 83.3 per cent 12 months ago), followed by CBA/Colonial with 76.3 per cent (a 2.7 per cent increase).
While it remains to be seen whether the Future of Financial Advice (FoFA) legislation will have any impact on these numbers, as the large licensee groups are generally restricted to recommending funds from their Approved Product Lists, the report concluded that this issue is likely to receive increased attention in future.
For more information on the Roy Morgan report, click here.
Leave a Comment
You must be logged in to post a comment.