Platform payments under the spotlight

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Payments from platform providers to advisers need to be monitored more closely and disclosed more readily, according to OneVue CEO Connie McKeage.

McKeage says that while the payments might be fine, the non-disclosure of them is not in the best interest of clients and goes against competition.

“It’s actually a serious problem for independents within the industry because it’s really quite anti-competitive, specifically for those that have taken the view that everything does need to be disclosed,” says McKeage. “And I don’t think it’s really the intention or what the Government had in mind, when they were saying that people should act in the best interest of the client.”

McKeage has talked to other businesses in the industry that say they are in the same boat as her – advisers that have lost adviser groups to people making these payments. “We’re decided to start standing up for competition basically, and for genuinely acting in the best interests of the client.”

The payments could be one of two; a payment to keep the money where it is, or a payment to move the money onto a platform. When that fee or product is more expensive or does not have the same or equal features to something else in the market, then McKeage says the client needs to know.

“If they can genuinely stand up and say this is in the client’s best interest, then you would’ve thought there should be absolutely no hesitation in letting the customer know that they’ve received a payment for staying in that fund. And if they’re not willing to stand up and tell their customer, you’ve got to ask yourself why.

“It’s very hard, if you’re an advisory group and you’re struggling and somebody opens up their cheque book and gives you money. Are we saying that’s wrong? No. we’re not saying that’s wrong, as long as the customer knows what’s transpired.”

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  • Pat on 23/04/2013 1:31:12 PM

    Peter, how do these platform payments differ from a situation where "a member owned joint venture platform business [which] has … embedded a management margin to fund distributions to shareholders." That is, a platform where a margin is paid back to the adviser via their shareholding? Just curious to understand what must be a significant difference. Just curious as to how this delivers an unconflicted, independent offering to a client where the recommendation of the platform leads to increased dividends to shareholders.

    Interestingly, looking at one of the member firm's FSG, their shareholding in this member owned platform is stuck right at the end, in a way that in no way discloses the benefit they get for recommending the platform.

    Like I said, just curious. And no, I am not JH.

  • Peter Johnston - AIOFP on 23/04/2013 11:49:42 AM

    Yes, the Minister is turning a blind eye to the 'bad old days' of ADL's going into the pockets of advisers to change platform affinity.The consumers should be informed as well as the shareholders of the Institutions giving the cash away. Looks like the Ministers mantra of eliminating conflicts and advising consumers to 'swim between the flags' of APRA/ASIC [with his indirect promotion of SMSF structures]is nothing but political opportunism, again!!

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