Royal commission could ‘restructure’ advice

Speaking in Sydney, ARCO chairman and financial services veteran Bruce Loveday said he will be looking for implications for the structure of the industry when commissioner Kenneth Hayne hands down his interim report on 30 September.

The interim report of the royal commission, as well as the final report (due by 1 February 2019), will be best read in the context of the ANZ, CBA and NAB’s decisions to divest their wealth management businesses, he said.

“You've seen what has been the mainstream model for the industry for probably 20 years – vertical integration – basically being absolutely smashed,” Mr Loveday said.

Vertical integration is “not coming back” irrespective of what the royal commission finds, he said – but Mr Hayne’s findings could well be the nail in the coffin.

“What you are going to potentially see is an industry that's got a lot more independent participants in it: independent advisers, independent researchers, independent fund managers,” Mr Loveday said.

“And arguably a much better advice profile that ultimately flows through the whole system to the end consumer.”

The days of ‘womb to tomb’ financial services providers are over, he said.

“Independents who actually focus on genuinely added value is going to be the major thing that comes out of [the royal commission final report] from a long-term industry perspective,” Mr Loveday said.

The royal commission hearings into superannuation begin on Monday, 6 August and will run until Friday, 17 August.

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