Independence no guarantee of quality financial advice
People who want financial advice are looking for stability and security - which is exactly what bank-aligned planners can provide them with, according to Hunts' Group director Anthony Hunt.
It is a mistake to assume that independence is clients' primary consideration when choosing a planner, he said.
Instead, people are more concerned about trust, quality of advice and the backing of an institution, Hunt said.
"I think there's a view - not so much in the industry media but in the general media - that independence is sort of a guarantee of better quality planning," he said.
Boutique Financial Planning Principles Group president Claude Santucci agreed that independence was no guarantee of the quality of advice, but he objected to the assertion that people come to planners looking for "stability and security".
"They assume they're going to get stability [when they go to see a planner]. They assume they're not going to lose capital," he said.
Santucci doesn't object to planners having the backing of an institution and pushing their institution's products on their clients - but he wants them to be honest about it.
"If I was an adviser with Hillross I'd have a big AMP sign behind my desk on the wall. And I'd make the point that I have the institutional backing," he said.
Hunt conceded that if a consumer goes to a bank-aligned planner they have a much higher likelihood of ending up with one of that bank's products.
"I don't think that's any great surprise to anybody. You know what you're going to get. [But] that may be what you choose, and you may well value the brand and the stability of the organisation," Hunt said.
AMP director of financial planning Steve Helmich said the clients he talks to place a high value on advice that is backed by a strong institutional brand.
"We encourage planners to let their clients know that the advice they give while under the Hillross brand is backed by the AMP brand quality," he said.
Helmich said the strong branding and product research of institutions had allowed them to avoid many of the "blow-ups" in recent years.
"If you look at some of the failings in the industry over the last few years, they've mainly been in [the independent space].
"And that's because they've been exposed to products where there hasn't been good strong due diligence around product selection," he said.
Recommended for you
AFCA has confirmed United Global Capital’s membership of the body will not be extended to accept further complaints, avoiding a repeat of the Dixon Advisory scenario.
Three of Australia’s largest financial advice groups have shared their thoughts with Money Management on whether they would include crypto on their approved product lists.
Shadow treasurer Angus Taylor has vowed to introduce a bill to legislate a raft of financial services reforms if the Coalition is elected.
Money Management examines the share price of financial advice licensees over one year to 31 March, with M&A actions in the final quarter having a positive effect for two licensees.
