A financial adviser fintech which has experienced huge growth in over six months is calling for practical royal commission action following the release of the final report.
The Hayne royal commission is due to be publicly released later today and WealthO2 has called for reasonable actions that directly lead to better client outcomes.
“Otherwise, we will miss this great opportunity to reform the industry and ensure good advice is available to more Australians. The good news is that many advisers are not waiting on the commissions to guide their path,” said managing director Shannon Bernasconi.
Ms Bernasconi has seen WealthO2 reach $1 billion in funds under administration after launching in 2016 to directly address issues that were eventually brought to light during the royal commission.
“Advisers are attracted to us because we are an unconflicted alternative to wraps and platforms.”
“We offer lower costs for their clients, and lower costs for the advisers through technology and scalability,” she said.
Ms Bernasconi said the company offered solutions to areas where traditional wealth management had been found wanting, namely transparency, conflict of interest and consumer choice.
“The vertically integrated model is inherently opaque and we’ve seen that with hidden fees and lack of proper comparative information on statements of advice (SoA) and marketing materials,” she said.
The removal of conflict of interest was a good start but didn’t address the core issues said Ms Bernasconi.
“Removing obvious conflicts like grandfathered commissions and non-disclosed dealer group payments is a good start but won’t address the main rationale of advised clients for using a platform.
“Most SoAs show a comparison between the client’s existing situation and the platform the adviser recommends as a replacement, but seldom gives any further comparisons. Does that really fulfil a best or better interest duty?”
This evolved conflict is rarely the fault of advisers but rather the way the industry has evolved said Ms Bernasconi.
The Investment Trends Planner Technology Report 2018 showed that the average number of platforms used by planners for new client inflows per planner was at a 10-year low of 2.3 platforms.
“This is fair and reasonable only if a review of all providers is performed regularly to determine the 2.3 for that practice ensuring adequate choice for consumers,” she said.
Ms Bernasconi said it was an exciting time for the industry and was the start of a new era of advice for Australians.
“We believe this is the beginning of a revolution that will see better, fairer more equitable advice available for all Australians,” she said.
Eliot Hastie is a journalist at Momentum Media, writing primarily for its wealth and financial services platforms.
Eliot joined the team in 2018 having previously written on Real Estate Business with Momentum Media as well.
Eliot graduated from the University of Westminster, UK with a Bachelor of Arts (Journalism).
You can email him on: [email protected]
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