02 Aug 2013

In an environment of increasing industry concentration, most financial advisers belong to an aligned dealer group, but their clients seem to think otherwise.

About 28% of financial advisers belong to an independent dealer group and their funds under advice account only for 17% of the total according to the March 2013 Rainmaker Advantage report.

However, a recent survey shows that most clients of advisers working for aligned dealer groups think that they are independent and are not aware that they are institutionally-owned.

A Roy Morgan research found that consumers are confused when the planner is branded differently to the major fund manager that owns the planning group.

As many as 51% of the clients using Financial Wisdom (owned by the Commonwealth Bank) think that it is independent, ahead of the 21% who consider Commonwealth Bank branded planners to be independent.

Around 33% perceive Count Wealth as independent and 32% think the same of Colonial First State, but they are both owned by the Commonwealth Bank.

Similarly, 48% of clients considered that Godfrey Pembroke (owned by NAB) advisers are independent, while only 21% thought the same of NAB.

Only 7% of Westpac financial planners’ customers considered them to be independent compared to 13% for the ANZ and 15% for the NAB and 21%.

ANZ-owned RetireInvest was thought to be independent by 37% of the people surveyed and 13% thought that ANZ planners were independent.

With a large proportion of advisers being owned by fund managers the need for clients to understand the extent to which their adviser is independent will become critical and should not be confused by branding,” Roy Morgan spokesperson Norman Morris said.

Written by Laura Millan in the Financial Standard.

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