Boutique practices and independent financial advisers may initially struggle with the vertically integrated business models that have emerged from restructuring and consolidation in the financial services sector, but the architect of the changes says better times are around the corner.
Bernie Ripoll, parliamentary secretary to the Treasurer and former chair of the Corporations and Financial Services Joint Statutory Committee, on Friday told delegates at the International Responsible Investment Conference in Melbourne that smaller players should not fear the ongoing land grab by institutionally owned adviser licensees.
“Potentially that [branded advice] may happen for a while until the industry finds its own feet,” he said. “However, more and more people are engaging with their superannuation or investments and really want something that suits them personally and are prepared to look elsewhere.
“The challenge is to respond to them because the big players aren’t just sitting on the sidelines waiting for all this to happen around them; they are responding as well.”
After consolidation
While Ripoll acknowledged concerns around a return to the tied-advice model at the very time many in the industry are pushing for financial planning to be recognised as a profession, he said he did not anticipate a “vanilla market” for financial advice.
“There is no doubt that restructuring and consolidation in certain areas may lead to more tied advisers and maybe some more structured advice around particular products, but clearly labelled, based on a particular product set,” he said.
“That doesn’t bother me so much… if that’s where they’re happy and they’re getting a good service and it’s managed properly and everything’s right, then there’s nothing inherently wrong with it.”
Turning to the Future of Financial Advice (FoFA) reforms, Ripoll said the legislation should be a source of pride as it was now guiding other countries, such as the US and UK, as they look to overhaul outdated regulatory frameworks.
“I like to think that we are leading the world in this area,” he said. “There are still things we can do better but at least we are on the right path.”
While Ripoll’s link to the Responsible Investment Association of Australasia (RIAA) may not be immediately apparent to Professional Planner readers, he is the chair of the Sustainable Australia Caucus Committee and also co-chair of Labor’s Friends of Sustainable Cities group.
Financial planning will never be a “Profession” while the large intsitutions push their products via tied sales agents. To be professional one needs to have no ties to any institution, charge a fee for service and be independant. I call on the regulators to ban product manufactureres from having any tied sales agents or lose arrangements with any adviser. All advisers should be independantly licensed throuigh ASIC and ASIC should do the job properly i.e. not shutting the gate after the horse has bolted as is the case currently.
Of course a politician wont admit that FOFA has reduced competition and the move back to the tied adviser model as a consequence of FOFA is not a concern – what a load of rubbish.
How about FOFA address the issue of all the tied advisers hiding under different dealer groups names and not clearly showing that they are owned by a big bank. How was this not clearly an important part of best interest duty ?? If politicians are happy for the banks to own 90% of advisers then make them VERY CLEARLY show this ownership, as currently they dont.
Bernie will be a paid consultant for one of the big banks in no time after politics with feeding of their vertically integrated system he has done so well.