Dealer groups not aligned to major institutions are struggling to implement non-conflicted investment solutions before the Future of Financial Advice (FoFA) reforms take effect on July 1.
This is the view of investment management group Select Asset Management, with chief executive Brendan Foley noting increased demand for simple, conflict-free portfolio construction services.
While financial planning licensees have had months to consider their business propositions under the new regulatory regime, guidance on the finer points of best interest and conflicted remuneration have been recent additions.
Foley added that institutionally unaligned groups are also seeking greater business certainty built on non-conflicted remuneration structures and a systematic approach to enhancing the full value proposition of unfettered financial advice.
“Demand has increased as we approach the July-1 start date for FoFA reforms, with many quality dealer groups seeking innovative ways not only to remove or minimise their compliance risk, but to properly unshackle their advice from the constraints of inherent conflict,” he said.
Foley also warned that licensees have had too few choices as they seek a non-conflicted approach, which means avoiding the pitfalls of institutional dealer group models where research, investment and platforms can be tilted towards inhouse-investment products.
“Standard model portfolios and recycling approved-product lists no longer make the grade,” he said.
Product news
Select has secured partnership agreements with several financial advisory firms and expects many more institutionally unaligned licensees to be interested in its Customised Portfolio Solutions (CPS).
Victoria-based DMG Financial Planning, which operates under its own license, is the most recent firm to sign on for Select’s CPS.
DMG director and financial planner Gary Lucas said the practice had conducted its own research in-house for many years but, post GFC, had decided it needed a higher level of expertise.
In related news, the payment of conflicted remuneration has been removed from the FirstChoice Retail platform, which means new clients are eligible for an automatic fee rebate from June 11. The fee rebate is equivalent to the amount of commission that was previously payable.
FirstWrap plans to launch a new online dashboard offering greater visibility of client accounts and enhanced administration support.
“We continue to innovate to enhance our existing model portfolio functionality on FirstChoice. We are now the first platform to combine a new record-of-advice (RoA) tool with model portfolio implementation, so in one click an integrated process for portfolio change and advice-documentation compliance across all clients, saving advisers an enormous amount of time,” said Colonial First State’s general manager product and investments, Peter Chun.