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‘Quality over quantity’ advice avoids EU risks

Due diligence on prospective financial planners and firms is front of mind for the parent companies of financial planning dealer groups if they want to stay out of the regulator’s sights, according to a dealer group executive.


Speaking on a panel at last week’s Association of Financial Advisers conference on the Gold Coast, Matt Englund, managing director of BTFG businesses Securitor and Licensee Select, raised concerns that practices that had looked to join BT dealer groups en masse earlier this year and were knocked back over compliance concerns were able to readily find a home elsewhere.

The idea that growth is the priority for bank-aligned financial planning groups is misguided, he said.

“There are two things that [would] get me a conversation with Gail Kelly – the first is a Securitor convention, the second is the risk of an EU [enforceable undertaking],” Mr Englund said.

“An EU has the potential to damage the reputation of the bank and if anyone has been through one, they’re pretty difficult to handle – so a bank wants to stay away from one and the outcome of that is being very clear about your filters.”

Mr Englund reflected on a “process earlier this year” whereby BT undertook “very very deep due diligence” of a number of advice firms en masse who were seeking to join BT dealer groups as an example of the banking group’s commitment to the ‘quality over quantity’ directive.

“Having looked at 40 practices, we took nine – the others did all find homes in our industry, but what we saw was inconsistent with the culture that we have in our business and the quality of advice minimum standards we have in our business and, to be blunt, inconsistent with what we understand the law to be,” Mr Englund said. “Quality comes first, everything else is secondary.”

Mr Englund also expressed concern about the fact the firms that did not pass through BT’s filtering process were able to find alternative licensing arrangements, describing it as a “major problem” for the industry.

In June this year, managing director of BT Select Phil Butterworth spoke to InvestorDaily on the issue of recruiting practices, saying the issue of sign-on or recruitment bonuses had been overstated and the group simply looked to cover costs of “quality” businesses that would fit with the BT Select model.

At that time, he said BT Select had grown to more than 50 practices from 10 a year earlier, and included 45 licensed under BT’s Magnitude, seven or eight self-licensed businesses and six that had joined from AFS Group.

 

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