The Hayne royal commission is expected to be released later today and WealthO2 has called for reasonable actions leading directly to better outcomes for clients.
“Otherwise we will miss this great opportunity to reform the industry and ensure good advice is accessible to more Australians.” The good news is that many advisors are not waiting for commissions to guide them,” said Executive Director Shannon Bernasconi.
Ms Bernasconi saw WealthO2 grow to $1 billion in funds under administration after launching in 2016 to directly address issues that were ultimately highlighted during the royal commission.
“Advisors are attracted to us because we are a conflict-free alternative to wraps and platforms. »
“We deliver lower costs to their clients and lower costs to advisors through technology and scalability,” she said.
Bernasconi said the company offered solutions in areas where traditional wealth management fell short, namely transparency, conflicts of interest and consumer choice.
“The vertically integrated model is inherently opaque and we have seen this with hidden fees and lack of appropriate comparative information on Statements of Advice (SoA) and marketing materials,” she said.
Removing conflicts of interest is a good start, but it hasn’t solved the fundamental problems, Bernasconi said.
“Removing obvious conflicts like grandfathered commissions and undisclosed payments from broker groups is a good start, but will not address the primary reason advised clients use a platform.
“Most SoAs present a comparison between the customer’s current situation and the platform recommended by the replacement advisor, but rarely give other comparisons. Does this really fulfill a higher or higher interest obligation? »
This evolved conflict is rarely the fault of advisors but rather the way the sector has evolved, Ms Bernasconi said.
The 2018 Investment Trends Planner Technology Report showed that the average number of platforms used by planners for new client inflows per planner was at a 10-year low at 2.3 platforms.
“This is only fair and reasonable if a review of all providers is carried out regularly to determine whether this practice ensures adequate choice for consumers,” she said.
Ms Bernasconi said it was an exciting time for the industry and the start of a new era of consultancy for Australians.
“We believe this is the start of a revolution that will see better, fairer and more equitable advice available to all Australians,” she said.
