Unilateral changes alienating planners

A lack of consultation around change within dealer groups risks alienating financial planners. 

Anne Fuchs from Pinnacle Practice, who consults with dealer groups and financial planning businesses, said many of her clients are working on major overhauls on value propositions, pricing and overall service offering with little or no consultation with their adviser base. 

She said this was mostly the case with medium-sized dealer groups where major banks hold minor stakes and smaller, independently-owned groups. 

“This started at the end of last year and the momentum has just gone from a trickle to every dealer group head being in various stages of re-modelling their business,” Fuchs said. 

“Many dealer groups I work with have been coming to me with entirely new pricing schedules, value propositions, cutting back things that have been generally core – practice management is a really obvious one to pull out,” she added. 

With the Future of Financial Advice deadline fast approaching, many Australian financial planning groups have started to implement changes to their business models and value propositions. However, potential consequences of poor market consultation might include alienating the existing adviser base and causing planner migration to their market rivals, Fuchs said. 

“One particular dealer group that is positioning itself as independent has rolled out new commercial terms which spell out its own version of vertical integration,” Fuchs claimed. 

“Independent advisers don’t want that, so all of these decisions are being made without any research,” she added. 

“McDonald’s might think it would be a good idea to take the pickles off the cheeseburger, but I’m sure they’d do extensive market research before actually changing the menu.” 

Kate Humphries from Pathways Licensee Services, who mostly works with self-licensed advisers, is seeing a reflection of this trend. 

She said there was an increase in interest from individual advisers about obtaining their own licences. 

“What we are seeing increasingly is interest from people who are feeling disenfranchised because decisions have been made for them,” Humphries said. 

“We certainly have people come to us that would say that they are interested in having their own licence because they feel like they’re not having enough say in the approved product lists and the way that they’re providing advice,” she added. 

Ann Fuchs said the problem might lie in management teams. 

“I would argue that some of the people making decisions have very limited experience in running dealer groups and working with and understanding what business owners and advisers really want,” she said. 

“I hope that these decisions aren’t flawed because they may not understand what their customers really want.”