Financial advisers exiting major bank-owned licensees may not readily understand the cost and value of quality dealer group services, according to Centrepoint chief executive, Angus Benbow.
Speaking to Money Management following the release of the company’s annual results to the Australian Securities Exchange (ASX), Benbow said that in circumstances where some advisers had been operating in the subsidised service environment of the major institutions they were unlikely to fully appreciate the un-subsidised costs associated with dealer group services.
He said there was a need for advisers to appreciate what they needed pay for quality service proposition.
Benbow’s comments came as he acknowledged the impact of the Treasurer, Josh Frydenberg’s announcement on Wednesday that the Government had tasked the Australian Securities and Investments Commission (ASIC) with monitoring the transition of planners and planning groups away from grandfathered remuneration.
“We’d like to think we took a proactive leadership position on that 12 months’ ago moving our service offering and the fees we charge to a more contemporary model,” he said.
“With our licensed advisers we’ve moved them from 1 July last year onto a direct transparent fee model which moved them away from any subsidisation or grandfathered rebates that have been in place in the past.”
However, Benbow emphasised that it was a year-long transition process because it would have been detrimental to both advisers and their clients to have turned off the grandfathered arrangements straight away.
He said the real positive for Centrepoint was that its new fee model had been accepted by 86 per cent of the advice firms working under the company’s license.
Benbow said he believed the exit of the banks and the closure of some other licensees had clearly created opportunities for Centrepoint because it was one of the few scale players.
“It clearly means a lot of opportunities,” he said. “We’re really excited about the opportunity it represents. Our new service offering is contemporary.”