Call for removal of APLs

Calls for the removal of Approved Product Lists (APLs) have emerged, with some industry participants claiming they have the potential to erode the quality of advice given to clients.

Daniel Brammall, co-founder of a new planner association called the Independent Financial Advisers Association of Australia, said financial advisers should be allowed to advise on and recommend any product they deem appropriate for their client, “not just those placed on an Approved Product List”.

He said being limited in the choice of products they could use did not allow advisers to maintain good quality advice.

“If you come to me for advice on a particular product you’ve got then I, as a fully qualified professional, should be able to give you advice on that product regardless of what some dealer group has in research,” Brammall said.

He said financial advisers were required by law to know their client and the products they recommend, but APLs were not required by legislation.

The principal of Sydney-based firm Wealth Advice, Marissa Broome, acknowledged remuneration conflicts existed between product manufacturers and dealer groups/practices, but said removing APLs was not possible.

“They [dealer groups] are getting kickbacks from fund managers to have that product on the APL in the first place and that’s conflicted,” Broome said.

Acquiring professional indemnity (PI) insurance was not possible without showing an APL, and planning businesses cannot operate without PI insurance, she added.

“You have to have an APL because there is a universe of products out there and you cannot possibly know them all well enough to deal with all of them,” Broome said. “You must have a solid core of products that you use a lot — which you know well and have researched thoroughly.”

DKN chief executive Phil Butterworth (pictured) said he believed APLs were absolutely necessary as long as there were no conflicts in their preparation. Conflict-free Approved Product Lists are put together by investment committees made up of research houses and independent parties, Butterworth added.

“My view is that it doesn’t matter if they’re not legislated, it’s the best practice process that we should be going through to ensure that investments our clients are placed into are being thoroughly researched and are up to a standard,” Butterworth said.

A survey carried out by researcher CoreData last year revealed that most advisers felt limited in their choice of platforms and that 40 per cent would have liked more platforms available on their dealer group’s APL.