Shape-shifting dealer groups

platforms FOFA financial advice reforms professional investment services money management future of financial advice chief executive government PIS

29 October 2010
| By Mike Taylor |
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Count Financial has signalled that it is prepared to adjust to changes arising from the Government’s Future of Financial Advice reforms by restructuring its business model to become the responsible entity for its preferred platform offerings.

Count chief executive Andrew Gale told a Money Management roundtable that such a restructure was an option in circumstances where the Government was examining volume payments from product providers.

Professional Investment Holdings managing director Grahame Evans said that Professional Investment Services (PIS) would be likely to adopt a similar approach in the event of legislative and regulatory change.

Gale said that he agreed with the need for change in circumstances where volume payments either conflicted the provision of advice or had the potential to conflict advice.

Discussing the Government’s examination of volume rebates being undertaken by Treasury, Gale said that he believed the more officials probed the situation, the more they were recognising that some volume payment structures had the potential for conflict while others did not because they were effectively “product neutral”.

He said he believed there was at least some recognition that arrangements that were “product neutral” should not be picked up in the proposed reforms.

“So one possibility is that volume payments which don’t conflict advice may continue; that’s a possibility as opposed to a probability at this stage, if the reform went ahead in the current form,” Gale said.

“And we’ve already flagged, for example, that yes we would need to restructure our business model and we would restructure it by becoming the responsible entity for our preferred platform offerings,” he said.

“And with the usual selection of fund managers, we would contract platform infrastructure services and, at the end of the day, the margin that we seek to gain through providing the service that we provide would be pretty resilient.”

Evans said that PIS would be able to pursue a restructured model because it had the volume and the infrastructure to do so, but many boutique financial planning groups would find it a challenge.

However, he said that there also needed to be clarity around the issue of whether platforms represented a ‘product’ or a ‘service’.

“The argument for me comes down to partially this long-running discussion around platforms and whether platforms are a product or not and do they actually influence investment selection,” Evans said.

“And when you go back to when platforms started and you go through the history, platforms have always been an administrative mechanism.”

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