The Investment Trends Planner Business Model Report – which surveyed 1,038 financial planners in May 2014 – revealed a 55 per cent increase in the proportion of advice practitioners intending to switch licensees in the next 12 months.
Reflecting on the finding, Investment Trends senior analyst Recep Peker has speculated that of those considering a licensing change, a greater proportion are enticed by non-aligned dealer groups due to higher levels of planner satisfaction.
“We began measuring dealer group satisfaction for the first time in this year’s study, and found that planners working in a majority of independent dealer groups had higher levels of overall satisfaction compared to those working in bank or institutionally-aligned dealer groups,” Mr Peker said.
“As expected, dealer groups that have more satisfied planners typically have a smaller proportion planning on leaving.
“To improve planners’ satisfaction, a key area for dealer groups to focus on is enhancing the effectiveness of the advice and review process,” he said.
Mr Peker added that “aligned dealer group channels are at risk and we may be entering a period of increased upheaval”.
The report comes as the government considers including AFSL ownership information in the proposed adviser register and ASIC has suggested the possibility of requiring institutionally-aligned advisers to describe themselves as “restricted”, akin to regulations in the United Kingdom.
In a sign that the sensitivity of the issue is escalating, AMP issued a strongly-worded second submission to the Financial System Inquiry defending its vertically integrated business model, as did Westpac and the Commonwealth Bank in their respective submissions.
“There is no evidence that ‘independent’ advice is of any greater quality than advice from other business models; indeed, advice from ‘independents’ has proved to be the most damaging to consumers and was the driver of the original Ripoll Inquiry,” the AMP submission states, adding that vertically integrated groups have additional resources to contribute more meaningfully to the “Australian community”.
Meanwhile, tensions are also flaring within AMP’s Genesys dealer group, with a number of authorised representatives demanding greater product flexibility and threatening to find alternative licensing arrangements.
The principal of a Genesys-aligned financial planning practice told InvestorDaily that a “fairly large chunk” of the network are involved in negotiations with parent company AMP over a number of advice provision reform demands.
“The issue here is the advice we can provide to clients. We want to provide independently-minded advice and want access to numerous platforms,” the principal said. “We want to make sure we can fulfil our best interests duty.”
InvestorDaily is currently undertaking its own research into financial planning dealer group sentiment. To take part in the survey and go into the running to win a bottle of Penfolds Grange click here.
