Cornish Wealth Management is coming up to the first year anniversary of gaining an Australian Financial Services Licence (AFSL Number 436740). The significance of this cannot be understated. Since becoming a Financial Planner ten years ago I always had the ambition to achieve this; to break away from the vertically integrated model that the financial planning industry is based on. Despite the initial and ongoing costs, and the considerable time involved, I wouldn’t want it any other way.
A Senate inquiry into financial products and services, known as the Ripoll Report, found that “approximately 85% of financial advisers are associated with a product manufacturer, so that many advisers effectively act as a product pipeline”; (page 70). This is how vertical integration operates – the supply chain of a product is controlled by the product manufacturer, and this is apparently what is happening 85% of the time. The Association of Independently Owned Financial Professionals, of which I am a member, lists some of the product manufacturers and associated financial planning businesses. For example, apart from their in-house financial planners, the following are some of the AFSL’s owned by product providers:
NAB: Apogee, Garvan Financial Planning & Godfrey Pembroke;
Westpac: Magnitude & Securitor;
CBA: Financial Wisdom & Count Financial,
AMP: Charter Financial Planning, Genesys Wealth Advisers, IPAC Securities & Hillross.
IOOF: Bridges, Plan B, Ord Minnett, Consultum Financial Advisers, Lonsdale
Financial Planners can only operate under an AFSL, and the AFSL essentially dictates what products can be recommended via the use of an Approved Product List (APL). Ray Miles recently commented in a Professional Planner article that “Last year one prominent institutionally-owned group offered to slash fees by over 90 per cent for practices which agreed to adhere to a limited Approved Product List”. He later concludes, “Sadly, the real cost for the investor is compromised advice.”
Cornish Wealth Managementvcould have aligned themselves with an institutionally owned AFSL and benefited financially, however felt that independent ownership is important to our clients. Being independent financial advisers, we prefer to sell advice; not products.
Give us a call and have a chat; we’re not big, but we have your best interest at heart.