Product-pushing mindset must change: Premium

August 9, 2012

Financial planning has little chance of becoming a credible profession while institutions pursue distribution and practices are constrained by recruitment deals with product providers.

In a wide-ranging interview with Professional Planner Online, Premium Wealth Management CEO Paul Harding-Davis said he struggles to envisage a world that has a high regard for professional advice when the major institutions remain obsessed with distribution.

“I am not judging their strategy at all … in their place I would be doing the same thing,” he says. “I just think that using the term distribution has some sort of cognitive dissonance with the concept of advice, of professional advice that is in the client’s interest.”

Harding-Davis says his view has also been influenced by the recruitment strategies he is witnessing first-hand.

“It is hardly good for the industry to have so much money changing hands, and presumably if you take the money there is a lock-in period, all these things must constrain how you operate,” he says.

“In all honesty, recruiting without some sort of transition payment, equity stake, some sort of financial involvement is fairly tricky at the moment,” says Harding-Davis, adding that Premium is looking for like-minded advisers who wish to operate free of institutional ownership and “do not want this sort of thing on the table”.

Click below for Harding-Davis on recruitment and the challenges facing non-aligned practices.

Harding-Davis says his sense is that most non-aligned and own-licence operators are happy with the core components of financial reform but are awaiting the administrative detail of FoFA.

“I’m not sure how anybody could sign up and say they’d transitioned to FoFA at the moment,” he says. “Fundamentally you don’t even know how to administer key components of it.”

Click below for Harding-Davis on his FoFA concerns and the road ahead in 2012.

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5 responses to “Product-pushing mindset must change: Premium”

Paul S

August 15, 2012

Should we be considering a move down a similar model to the US, whereby there’s a clear distinction between a “strategic advice” adviser (who provides no product advice) and product placement advisers?

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Bob Amery

August 10, 2012

i’m not sure the headline does the article or the interviewee justice…product pushing per se is not the problem…the problem is the pushing of house product by structurally conflicted, tied or aligned planners

obviously no adviser should push products but let’s be clear that the problem is conflict of interest as opposed to strategy/advice v product

save that debate for another day

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1. David Heycock
  
  August 10, 2012
  
  I think the problem is very deep indeed. In my view the vast majority of advisers are no more than product pushers. They are also dinosaurs because the public is waking up to how poor this kind of advice really is.
  To tell a client their selection of managed funds is no good and they need this particular suite of managed funds instead is not really financial advice. But this is still what the majority of advisers do. Even worse, their FUM driven dealer groups often have their total package of services and support built around product distribution of this kind as a feeder for their own profits – just as has been implied in the article.
  Conflicted advice which forces advisers to recommend these useless strategies from a highly limited suite of options is not only worse again but also highly unethical in my opinion.
  Until this practice stops – and I can’t see it happening any time soon – our industry will be on the nose.
  It’s what is driving investors away from managed funds. With no change in the industry that trend can only continue and will probably increase.
2. Pat
  
  August 20, 2012
  
  David is right – it appears many advisers still base their value proposition on ‘fund picking’ or worse now, ‘stock picking’. Of course, the entire fee structure is predicated on how much money of their clients they can invest. Yet, they think this is ‘financial planning’.
3. Stewart Furniss
  
  November 9, 2012
  
  As an aspiring adviser was really refreshing to work with an adviser who looked to best serve his clients first & foremost. I believe in this method and fee for service as when your providing quality advice and service the client’s will generally be happy for what they’re receiving and continue to use your service.
  
  Whilst other adviser’s I came into contact with whilst working at AXA North seemed more interested in how much they could be paid from their client’s accounts under MAF whilst generally providing very limited service and very basic investment portfolio’s which I’d think the client’s could have developed themselves.
  
  On occasion an adviser would ask where they should invest their client’s funds having undertaken no research themselves, these people should not be in the industry