One-man bands a victim of insto product push

In a recent episode of The ifa Show podcast, Fiducia Private Wealth Management principal Danny Maher – a former institutionally aligned adviser whose practice now operates under boutique group FYG Planners – said the institutions’ search for cost savings following multimillion-dollar remediation programs was a result of misaligned spending priorities.

“If you look at what’s happened over the last number of years, we’ve seen the large groups that are institutionally owned spend their money on platform,” Mr Maher said.

“If we look at the royal commission as an example, we’ve seen billions of dollars spent by institutions on remediation. A small group can’t afford that, but a small group that spends money wisely on making sure those things don’t occur is going to be ahead of the curve.”

Australian Unity general manager of advice Matt Brown – a previous chief executive of former ANZ dealer groups Millennium3 and Financial Services Partners – echoed Mr Maher’s comments at AIA’s Adviser Summit this week, suggesting the venture capital industry may step in to innovate in advice where the large institutions had failed.

“Of every dollar invested in technology, 90 cents in every dollar has gone to the infrastructure of product manufacturing and provision [with] very little residue left over for innovation at the adviser middle and back office,” Mr Brown said.

“It’s such a buzzword to say ‘let’s be client centric’ but we rarely do it, so if I was a VC I’d see [the industry] as ripe for the picking.”

Mr Maher said recent moves by major institutional players AMP and IOOF to cull lower value, mostly single-adviser practices were short-sighted and displayed a lack of understanding around where systemic issues in the industry had stemmed from. 

“What we’re seeing from the institutions is reactionary and unfortunately it still comes back to a product focus,” he said. 

“If you turn that around and say ‘I’ve got a good practitioner who’s going to fit the culture of our group who we can support with the right processes’, that practitioner is going to thrive and do the right thing, not only by their licensee but also by the profession as a whole.”