Institutions fail to understand planning market
LARGE institutions have failed to understand the nature of financial planning, despite the fact they are building large distribution groups, according to Sealcorp Victorian state manager Jennifer Purnell.
However, planners continue to see the banks, in particular, as their biggest competitors in providing advice, but Purnell says the banks do not have the culture to service clients and are more product driven.
“They may be capable of buying businesses, but they cannot win unless they begin to manage client needs,” Purnell says.
“The most important element in distribution is the client, but institutions will not be able to hold them if they focus on product sales and not help clients meet their financial requirements.”
According to Purnell, planners continue to attract and hold business because of the high level of relationships they hold. And, as levels of consumer confidence grow, independent advice separated from products will continue to attract investors.
She says growth in the number of planners seeking to go their own way has already begun, with 40 groups already using Sealcorp’s Dealer 2 Dealer service to provide back-office and compliance services.
“This trend will continue in the next three to four years as models such as aggregators unravel and there is a return to the smaller dealer group model owning the client and recommended lists,” Purnell says.
She says the next few years will be marked by institutions realising the purchase of distribution is a flawed strategy, especially as planners in their groups continue to leave in high numbers.
The aggregator model will also disappear and fund managers will make greater efforts to differentiate themselves on the strength of their products and services.
However, Purnell says it is almost impossible to pick the next big wave in the industry although core values will remain.
“The focus on client needs will survive despite the fact that the industry loves fads and trends,” Purnell says.
d trends.
The latest of these is the consolidator models and the purchase of dealer groups by institutions, but none of these add value to clients,” Purnell says.
“In that case they will not provide any long term payout and will probably fail as a business idea.”
AUTHOR
Jason Spits
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