The wealth management strategy recently announced by AMP is a return to the dark ages, according to Synchron’s chair, Michael Harrison.
Harrison believed the AMP announcements were very bad news as the new strategy would again represent a situation where institutions create products and force people into them.
He stressed that the core of the problems across the wealth management industry lay with banks and institutions while the sanctions introduced only caused a growing burden of obligations for advisers.
"To make matters worse, governments, and institutions with big budgets, appear to have also somehow manipulated the rhetoric to such an extent that many people seem to genuinely believe advisers have brought the current set of circumstances on themselves and have no empathy for them,” he added.
"What many people have failed to understand is that AMP and the institutions were largely responsible for the fees-for-no-service debacle, not advisers.”
Harrisson said that although AMP did not indicate how many advisers would be forced to exit the industry, following the rationalisation of its network, the estimates ranged from 30 to 80 per cent of adviser network.
According to Synchron, the Government mismanaged the financial services industry to such an extent that it has effectively handed institutions like AMP a free pass.
"The fundamental question governments and institutions need to ask themselves now is, how are consumers better off without advice?.”
Comments
Thanks Michael - good to see that people with integrity still exist in this industry.
Josh Frydenberg has effectively stated that the removal of grandfathered commission remuneration for advisers will enhance the quality of advice received.
This inference is unfounded, unproven and unacceptable for a senior politician to make sweeping statements for the purpose of political standing.
High quality advice can be delivered to consumers whether the client decides to pay for that advice via a direct fee, fees from their investment or in fact an acknowledged and transparent commission payment such as in Risk Advice.
The problem lies in the fact that many retiree clients in older products paying an ongoing commission to their adviser are better off to remain within their existing product. It may well be in their best interest to do so.
The perception being pushed in regard to the removal of grandfathered commission is that all consumers and existing clients will be much better off as a result of the removal and this is blatantly incorrect.
Statements of political convenience without appropriate analysis or substance must be held up for exactly what they are.
Kelly O'Dwyer did it relentlessly during the LIF negotiations claiming that the planned reduction in Life Insurance commission payments would result in " enhanced consumer outcomes".
No modelling, no evidence, no substance....just empty political marketing rhetoric in order to achieve an intended outcome.
Retrospective legislation is extremely dangerous and invariably unfair.
If the Govt had any form of reason, it would at least consider the option of having the grandfathered commission payments included within the FDS and Opt In legislation allowing all consumers to be fully informed and to make a value judgment for the services received,
AMP's recent announcement in regard to the BOLR is no different.
The Govt previously agreed based on legal advice to not include the grandfathered commissions within the FOFA legislation and now want to apply current legislation to change retrospective payments.
AMP agreed on a formula for BOLR, funded loans to advisers based on the same formula for business valuations and now want to apply current day valuations to retrospective decisions.
It simply goes to show the total lack of respect and consideration institutions, be them Govt or otherwise have for the health of the financial advisers, their businesses and their employees.
The methods by which Govt and institutions are prepared to utilise to achieve their intended outcomes are an absolute disgrace and need to be called out for what they are.
Whilst advisers are being forced to complete courses and exams on ethics, the current Govt and institutions are showing very clear examples of how very unethical and ruthless they can be.
If this isn't a very clear example of conflict of interest and placing your own interests in front of others, I don't know what is.
You contribute well agent 86. this move to save share holders interests at the expense of those that built it is the final straw for many. My boots fell off in November and exit is hard. They want us to be carried out dead it seems.
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