An almost inevitable consequence of the Commonwealth Bank's acquisition of Count Financial is that some of Count's financial planners have signalled they feel uncomfortable operating under the umbrella of a major institution and will be seeking to work in a different environment.
There is nothing unique about this eventuality. Recent history in the Australian financial planning industry confirms that almost every time an acquisition or buy-out occurs, planners choose to change camps.
Most recently there were changes when AMP acquired Axa Asia Pacific.
It is no secret that whenever an acquisition or some other transaction occurs, competitor groups seek to lure away good financial planners who they believe may have become disaffected by their changed circumstances.
This was certainly the case with respect to MLC in the immediate aftermath of AMP Limited's acquisition of AXA.
Retention payments and other incentives can only go so far in overcoming the misgivings of some financial planners about their new arrangements, and even the uncertainties created by the Government's Future of Financial Advice (FOFA) changes have failed to dampen their continued enthusiasm for a non-institutional approach.
Indeed, an increasing number of financial advisers are dismissing the assertion that the FOFA changes will solely play into the hands of the major institutions and industry super funds and give rise to a return of the old tied-agent approach.
Notwithstanding a broad recognition that factors such as ‘opt-in’ will add significantly to their administrative requirements and cost structures, there is a growing belief among experienced financial planners that consumers will continue to recognise the value of quality, independent financial advice clearly unaffected by links to banks, insurance companies or unions.
Indeed, there is a view that given the size and make-up of their client lists and their existing business models, FOFA, while undoubtedly vexatious, will not have an unduly dramatic impact on smaller, independent practices.
While FOFA and factors such as opt-in will represent a challenge for some financial planners, it will be less problematic for those who have regular contact with their clients throughout the year and who deal with fee-related issues on an ongoing basis.
This seems to have been reflected, in part, in recent research conducted by specialist firms such as Wealth Insights, which has revealed that the pessimism being shown by financial planners in the closing months of 2011 had far more to do with the state of the markets than their concerns about the ultimate state of the Government's legislation.
This reality has also been revealed in the diversity of submissions filed with the Parliamentary Joint Committee reviewing the FOFA bills, and the divergence in attitude around the role of volume rebates.
FOFA will almost certainly lead to the further dominance of the major institutions – but that does not mean independents will not only survive but very likely thrive.
