 There are a number of reviews underway in the Australian financial services industry, all of which ultimately aim to strengthen the system and improve the outcomes for consumers.
Strangely, at a time when the Government is looking to minimise conflicts of interest within the advice industry, a number of deals are being struck that risk seeing the industry return to a tied agent model whereby advice businesses are largely owned by financial institutions.
In the UK, financial advisers are either tied, multi-tied or independent. The US operates under a model which essentially classifies the vast majority of the advisory market as tied agents.
However Australia has long been held up as an innovative and forward-thinking industry, thanks in part to the establishment of the mandatory superannuation system and the widespread existence of boutique IFA businesses.
By pushing the advice industry down a path of fiduciary duty and greater disclosure, the reviews could inadvertently play into the hands of the big banks and financial institutions, which are already actively pursuing opportunities in the form of acquisitions.
New regulation generally comes hand in hand with increased compliance and this spells bad news for the many advisers who are already operating in the best interests of their clients.
National Australia Bank is on a buying spree having acquired Aviva late last year and is now locked into what appears to still be a two-horse race for big fish AXA Asia Pacific Holdings’ Australian and New Zealand assets.
Despite approving a $13.3 billion takeover proposal by NAB, shortly before Christmas AXA indicated the door remained open to key bidding rival AMP whose original offer with AXA SA was trumped by NAB.
AXA SA has an exclusivity arrangement with AMP that expires on February 6 or when AMP chooses to terminate it. This week AMP reportedly confirmed it is pursuing its application for approval of its merger proposal by the Australian Competition and Consumer Commission (ACCC).
The short term outcome of the acquisition race will be a distribution powerhouse led by the highest bidder for AXA’s adviser network. The long term outcome could be a return to the Dark Ages and the death of independent financial advice.
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Perhaps you would prefer more independent groups like Storm in the market. The truth is where advice is backed by players with deep pockets the consumer is protected AND they can generally access a wide range of product solutions and services.
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| Commenter: the realist Post Time:January 14th, 2010
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Your comments about the death of independent advice & so called tied agents are far too general.
There are plenty of advisers who are highly independent in regrd to the advice they provided who are licensed to a subsisdiary of a large finacial institution.
Your assumptions that ownership of a licensee automatically means that the advice is always biased to that organisation is incorrect.
You risk assisting form to triumph over substance
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| Commenter: Peter O'Toole Post Time:January 14th, 2010
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As a shareholder in the NAB, ANZ, CBA and Macquarie I beleive that a tied agent model is a good business strategy for these companies in which I invest.
As a Chartered Accountant and investment advisor (ASIC will not let me call myself independent), the tied model sets my advice apart from the tied agents.
For clients of course tied agents are just salesmen selling a product like a car saleman.
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| Commenter: Peter Vickers Post Time:January 14th, 2010
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