Dealer groups without their own products will struggle

Independent financial dealer groups need to create their own products if they are to keep up with the game, according to dealer group Titanium Financial Services distribution manager Mark Finch.

There is not enough money in providing white label products to planners, Finch said.

“Independent dealer groups … without creating their own product, I think they will struggle,” Finch said.

He drew attention to white-labelled platforms that dealer groups provide to planners, with very “sharp pricing” and a rebate structure built into them, but are reliant on volume.

“If they don’t do the volume, they don’t get the rebate,” Finch said.

“Who wins? The institution, not the dealer group.”

Finch believes dealer group business models need to change significantly to be able to sustain the changes that will occur in the market.

“We think more practices and more dealer groups out there will suffer, purely because of the fee-for-service argument...”

However, Finch said it was important that dealer groups who did build their own products outsource the investment management to an investment consultant.

A planner does not have the time to be an investment manager for all their clients’ portfolios, he said.

“It’s physically impossible.”