With widespread industry uncertainty and concern surrounding the proposed changes, all eyes remain firmly locked on the progress of the Future of Financial Advice reforms as we move into 2012 and ever-closer to the Government's proposed implementation date.
1. FOFA
The Government’s Future of Financial Advice changes have dominated the news for nigh on two years now and we still don’t seem much closer to a resolution.
There have been endless submissions from all sectors of the industry, and varying degrees of opposition to almost every aspect of the parts of the legislation that have been made public so far.
That now consists of two of three proposed tranches following the release of the second tranche in November.
The first tranche has already undergone several amendments and more are likely, with Assistant Treasurer and Financial Services Minister Bill Shorten conceding the Government may reassess the surprise inclusion of retrospective fee disclosure requirements.
With each delay the Government’s proposed 1 July 2012 start date becomes increasingly unlikely. Parts of the legislation have also garnered less than eager support from key independents who hold the balance of power of this minority Government.
Long after the industry would have expected certainty around these proposals, a huge question mark still hangs over almost every aspect of these critical reforms.
2. MLC
The wealth management division of National Australia Bank has been one of the most proactive in its attempts to increase its distribution network amidst the current round of industry upheaval.
The group publicly made a grab for AXA-affiliated practices that may have become disenchanted during the group’s merger with AMP.
This followed an unsuccessful bid from NAB itself for AXA’s Asia-Pacific business when the Australian Competition and Consumer Commission deemed such a move would be anti-competitive.
MLC approached a large number of AXA practices, with several publicly confirming the switch, while a number of AXA executives also moved over to MLC during 2011.
It will be interesting to see to what extent MLC continues this acquisitive drive in 2012.
3. Matrix Planning Solutions
2011 was the year of the mergers, as uncertainty over the shape of impending Future of Financial Advice reforms saw DKN join the IOOF family and Count join forces with the Commonwealth Bank of Australia, while Snowball and Shadforth Financial Group also teamed up.
Late in the year Matrix Planning Solutions managing director Rick Di Cristoforo announced his group would be looking for an institutional backer to acquire 100 per cent of the business.
The group has already commenced discussion with potential buyers – although Di Cristoforo has yet to reveal any details surrounding the future of the group or his own career direction.
Given the departures of Count chief executive Andrew Cole, DKN CEO Phil Butterworth (to BT Financial Group) and Snowball chief executive Tony McDonald, there is no guarantee Di Cristoforo will remain with the group when a buyer is inevitably found.
Matrix appears almost certain to announce the future owner of the group some time in 2012, while the rapidly-dwindling non-aligned dealer group market could well take further hits.
4. Lonsec and van Eyk
Two research houses, both servicing the retail financial advice sector: one striding away from a period of disruption, and the other headed for the uncertainty which goes with a change of ownership.
When van Eyk founder and chief executive Stephen van Eyk departed the company in 2009, new CEO Mark Thomas oversaw a period of high volatility with a number of prominent departures, including head of research Nigel Douglas.
The uncertainty may have contributed to van Eyk’s mixed results in Money Management’s 2010 Ratings House of the Year award (which is based on feedback from fund managers and financial planners).
However, under Thomas and new head of research John O’Brien the firm moved up to outright second in 2011. Could it be the start of bigger and better things for van Eyk?
Meanwhile it was announced this year that Lonsec, a clear winner in both the 2010 and 2011 awards, would be sold by Zurich to the Mark Carnegie-linked Financial Research Holdings, parent company of superannuation researcher SuperRatings.
Almost immediately, Lonsec’s general manager of research Grant Kennaway announced he would be departing the company for rival Morningstar.
It remains to be seen how ties between the Industry Super Network (ISN) and SuperRatings (SuperRatings supplied the research for the ISN’s controversial ‘compare the pair’ advertising campaign) affect the firm’s standing with retail financial planners – traditionally philosophical opponents of the ISN.
5. Commonwealth Financial Planning
One year ago Commonwealth FP was one of Money Management’s ‘Top 5’ dealer groups of 2010, due to significant growth in financial adviser numbers and funds under advice (FUA).
At the same time the group was one of our ‘Top 5’ bad apples, thanks to the actions of rogue financial planner Don Nguyen – although CFP was proactive in cooperating with the Australian Securities and Investments Commission (ASIC) and reimbursing affected clients.
One year on and Nguyen has been banned for seven years by ASIC, while CFP has entered into an enforceable undertaking with ASIC to improve its risk management framework.
Just a year after joining from Count Financial, Marianne Perkovic succeeded Paul Barrett as general manager of Commonwealth’s financial advice division, Colonial First State.
In November, head of Commonwealth Financial Planning Neil Younger left after little more than a year in the role to join ANZ. No replacement has yet been named.
All the while CFP continues to be one of the largest financial advice groups in the country in terms of advisers and funds under administration. Can Commonwealth put the negative headlines behind them in 2012?
