MAGAZINE OF CHOICE FOR AUSTRALIA’S WEALTH INDUSTRY
www.moneymanagement.com.au
Vol. 34 No 18 | October 8, 2020
18
ESG
The threat of greenwashing
ASSET ALLOCATION
28
Lessons from endowment funds
TOP FINANCIAL PLANNING GROUPS
Uses for convertibles
FSC flags significant IP changes by major insurers BY MIKE TAYLOR
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The end of an era THE numbers of planners working at the biggest groups have continued to dwindle to its lowest levels in five years, underscoring the end of the banks’ dominance in wealth management, these were the finding of Money Management's 2020 TOP Financial Planning Groups research. A gradual and long-lasting decomposition of the verticallyintegrated model coupled with banks’ internal governance issues, and their continued exit, which happened at the time when the industry was still recovering from the Hayne Royal Commission and struggling with new rigorous standards imposed by the Financial Adviser Standards and Ethics Authority (FASEA), has definitely accelerated a drop in adviser numbers working for the biggest groups to around 13,200 from 14,500 last year. The single biggest financial planning group in Australia, AMP Financial Planning (AMP FP), which has managed to keep its title, saw a departure of 700 advisers over the span of five years, including around 250 planners who departed within the last 12 months. On the other hand, the second-largest player by adviser numbers, IOOF, has been on the opposite end of spectrum, expanding its business with recently-announced ambitions to become the number one retail wealth manager by funds under management, administration and advice, estimated at $510 billion. So, where did the planners go?
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AUSTRALIA’S major life insurers have confirmed via the Financial Services Council (FSC) that they will be exiting many of their exiting income protection products as they bring new, more commercially-effective offerings to market next year. The FSC has signalled the changes with its chief executive, Sally Loane suggesting that the choice for consumers will be to stay put within existing products and face the reality of likely premium increases or switch to what will be new, more affordable offerings. The FSC sent the market signal at the same time as saying it supported a framework recently put forward by the Australian Prudential Regulation Authority
(APRA) and the Actuaries Institute. The FSC is representative of all the major life insurers in Australia. Putting forward the FSC’s position, Loane noted that a recent KPMG report on international comparisons of income protection products had suggested that Australia offers the most generous and comprehensive income protection policies of any developed market in the world. She also noted that this was deemed to have exacerbated the recent increase in the incidence and duration of claims, including for mental health conditions. “We know there’s a direct link between increasing claims costs and increasing premiums, which is why Australians have seen Continued on page 3
AMP to centralise business services for efficiency BY JASSMYN GOH
AMP has announced it has made changes to its teams to centralise some business services within its investments and banking divisions across AMP and AMP Capital. In a statement to Money Management, an AMP spokesperson said: “Our focus is on continuing to reshape the organisation to drive efficiency and support the delivery of AMP’s strategy to become a simpler, client-led organisation”. While AMP could not confirm whether there would be any redundancies or when if any, it said it looked to be a more efficient organisation by bringing the human resource, legal function, and finance teams together to be a more centralised group. AMP noted that it was looking at a range of opportunities to drive that efficiency and some of these opportunities would likely impact roles.
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