Alexis George (left), Colin Tate and Renato Mota

The industry still values products over advice and the focus must be on having the client paying for the service rather than product according to heads of the two largest advice groups in the country, AMP and Insignia Financial.

Speaking at the Professional Planner Licensee Summit in Katoomba, Insignia chief executive Renato Mota said the industry needs a foundation where it’s economically viable to invest and innovate in advice.

“The industry still values products and continues to give away advice for free. Our view is that the value is all in advice. When a client walks into someone’s office they want some advice; they very rarely ask for products.”

AMP CEO Alexis George echoed the comment and said the industry has to be centered around advice as a professional service.

“The client has to pay for the advice and we should not go back to acting like a seller of product again,” she said.

Mota said the industry needed to build relationships that are built around cashflow, budgeting, awareness and knowledge.

Renato Mota

“We have an advice industry with a large moat around it. Our job is to bring down some drawbridges around that moat that allow people to opt in and out of advice and have a series of other services around it that are right for them at the right point in time.”

Mota said the industry is “tying itself in knots” over the issue of vertical integration, and the measure of success should be client outcomes.

“If the client is getting a great outcome… then I’m not sure there should be an argument around that.”

Sobering numbers

Alexis George

As AMP transitions away from a product selling business model the downside is the reality that being a licensee has been unprofitable.

At AMP’s AGM last month, George attributed this reality to the current regulatory environment. The advice business is projected for another loss in the next financial year.

At the summit, George said it was a “big decision” to disclose the profitability of the individual businesses after the wealth management arm had a loss of $146 million in its FY21 results.

“I’m not hiding from it, $150 million is a sobering number. We [disclosed those numbers] because we believe that different elements of our business need to stand on their own two feet.”