Independence the norm for future planners
The continuing trend of investment management firms concentrating on either manufacturing or distribution will create a “new independent advice world”, where financial planners will constantly have to demonstrate their advice is unfettered by institutional ties.
And Australia’s planners of the future can also expect to have more clients coming through their door.
The predictions were made by Russell Australia managing director Alan Schoenheimer at dealer group Professional Investment Services annual conference in Hawaii.
He said independent advice, where a financial planner is not tied in any way to a product manufacturer, will become the norm, with recent incidences of managers selling off their manufacturing arms, like the Citibank sale to Legg Mason and the Merrill Lynch sale to Blackrock, to continue, as managers aim to provide independent distribution.
And such non-tied advisers will be busier than ever, with Schoenheimer predicting the death of the corporate superannuation fund and choice legislation transferring investment decision-making away from institutions and towards the client — a trend he called the “retailisation of the institutional market”.
“Everyone will need an adviser, even for workplace superannuation . . . and even those with not a lot of money, so you will need to be really efficient,” he told delegates.
Scheonheimer added that a move of institutional pricing to the retail market would have an inevitable downward pressure on overall pricing. But as a positive, he said the trend would give financial planners more opportunity to demonstrate value through non-product sale related advice like the structuring of tax, superannuation, social security and estate planning.
According to Money Management’s top 100 dealer group survey last year, tied advisers still make up 70 per cent of Australia’s financial planners.
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