PaymentsJournal
SUBSCRIBE
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
No Result
View All Result

Royal Commission Findings Will Drive Independent Advice Market in Australia, Says Globaldata

PaymentsJournal by PaymentsJournal
April 20, 2018
in Press Releases
0
GlobalData logo

GlobalData logo

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry is poised to reveal widespread failure across the Australian financial planning sector, whose reputation has already been battered by recent miss-selling scandals and violations of Future of Financial Advice’s (FoFA) ‘best interest’ duty. The effects could be more than a fine, and a focus on vertical integration and the inherent conflicts means that the industry has to brace for significant changes ahead, says leading data and analytics company GlobalData. 

Peter Kell, the deputy chair of the Australian Securities and Investments Commission (ASIC) recently asked an independent expert to review the quality of financial advice that had been provided by 137 licensees to self-managed super funds (SMSFs) and found that 90% of advisors failed to comply with the best interests of their clients.

Earlier this year, when the ASIC examined whether advice to switch to in-house products satisfied the best interest requirement, three-thirds of advisors failed to comply.

Heike van den Hoevel, Wealth Management Analyst at GlobalData, says: “Customers are likely to think twice about the type of provider they opt for. This will drive growth of the independent advice market. Even demographics that are not typically drawn to independent financial advisors will find themselves more likely to opt for independent advice when they learn their trusted banking partner has been pushing products that are not in their best interests.

“On the flipside, financial planners are likely to ditch the big four banks (Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking Group (ANZ), National Australia Bank (NAB) and Westpac Banking) and AMP to set up their own businesses. In an industry plagued by a shortage of talent, that will be a big headache for Australia’s wealth giants.”

GlobalData’s Global Wealth Managers Survey shows that 80% wealth managers already agree that it is increasingly difficult to hire new relationship managers or other front-line staff.

Admittedly, there has been a 41% upsurge in the number of financial advisers in Australia from around 18,000 in late 2009 to more than 25,000 in 2017. However, the commission has learnt that only one-third of them (35%) hold a relevant university degree.

To address the issue, new compulsory education requirements for both new and existing financial advisors will come into effect on 1 January 2019.

van den Hoevel comments: “Australia’s big incumbents engage in both the provision of personal advice and the manufacture and sale of financial products, such as superannuation and insurance. Transitioning away from the vertically integrated model into a conflict-free model seems increasingly likely. This will be the biggest change to the industry since the big four banks moved into the wealth space more than 15 years ago.”

Already at the end of 2017, ANZ announced the sale of its OnePath Pensions and Investments business to IOOF, and CBA divested its insurance business CommInsure Life. Looking to the future there have also been rumors that NAB could spin off its wealth business.

van den Hoevel concludes: “As the Royal Commission is bound to reveal further failings, the wealth industry, which has previously been on a relentless path of horizontal and vertical consolidation, is about to get a strong push towards fragmentation and divestment.”

Tags: AustraliaGlobalData
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Analyst Coverage, Payments Data, and News Delivered Daily

    Sign up for the PaymentsJournal Newsletter to get exclusive insight and data from Mercator Advisory Group analysts and industry professionals.

    Must Reads

    On-Demand Webinar: Solving the Digital Onboarding Challenge​ – Increasing Conversions without Increasing Risk

    On-Demand Webinar: Solving the Digital Onboarding Challenge​ – Increasing Conversions without Increasing Risk

    February 8, 2023
    legacy infrastructure

    How Modernizing IT Can Help Banks Compete With Fintechs

    February 7, 2023
    Buy Now Pay Later BNPL, B2B BNPL

    B2B BNPL Offers a High-Potential New Chapter in Payments

    February 6, 2023
    eCommerce On Social Media, social commerce

    The Rise of Social Commerce and Social Payments

    February 3, 2023
    Electroneum AnyTask; ETN Crypto, sales enablement

    Ethical Financial Selling: The Role of Compliance Technology and Sales Enablement

    February 2, 2023
    direct deposit

    Nacha Launches Campaign to Reach Millennials on the Benefits of Direct Deposit

    February 1, 2023
    Equinix Helps UK-Based Payments Provider Enable Faster, More Reliable Payments Processing

    Equinix Helps UK-Based Payments Provider Enable Faster, More Reliable Payments Processing

    January 31, 2023
    credit card tumbling

    How to Detect, and Prevent, Credit Card Tumbling

    January 30, 2023

    • Advertise With Us
    • About Us
    • Terms of Use
    • Privacy Policy
    • Subscribe
    ADVERTISEMENT
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    • Industry Opinions
    • News
    • Resources

    © 2022 PaymentsJournal.com

    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Industry Opinions
    • Faster Payments
    • News
    • Jobs
    • Events
    No Result
    View All Result

      Register to download the Equinix report - Dojo Delivers Fast, Reliable and Secure Card Payments to Businesses on Platform Equinix