Spotlight on who owns client relationships


Shannon Bernasconi

Recent legislative changes around consent to charge adviser fees are prompting a number of advisers to reconsider their existing platform relationships, in part because of a disagreement over who owns the relationship with clients, says Shannon Bernasconi, Managing Director, WealthO2.

Last week, the government passed the Financial Sector Reform (Hayne Royal 4 Commission Response) Bill which means that, from 1 July 2021, superannuation fund members must consent annually to trustees deducting ongoing adviser fees.

Ms Bernasconi says that a number of platforms have taken the step of contacting clients of adviser groups directly, without the advisers’ knowledge, about the changes – in some cases, six months in advance of the legislation being introduced.

“Understandably, many advisers are unhappy to discover that their platform provider has been in direct contact with their clients, without notifying them first, to advise them of potential changes to their fees.

“This isn’t the first time that some platforms have contacted clients of advisers – we saw similar instances when fees and commissions were turned off by some platforms well in advance of legislation.

“No doubt the platforms believe they have good reasons for taking this step, and circumventing the adviser’s relationship with their clients.  They may claim that it is a regulatory requirement, or perhaps an action to reduce liability.  Another reason may be that they lack the technological ability to obtain consent in a more adviser led or digital way.

“However it can be argued that the direct contact from platforms – often without the knowledge of the adviser – has caused unnecessary concern for clients and, as a result, for advisers,” Ms Bernasconi said.

She added that this issue is playing into a broader shift of advisers taking more control of which product, platform or service they use.

“The exit of the banks from the wealth management industry, and the migration of those advisers away from aligned distribution, is changing the way adviser groups select and use providers such as platforms, with more choice and flexibility now available to them.

“We find it surprising that some platforms have chosen taken a very blinkered approach with advisers, which doesn’t take into account the annual review process where the client is consenting to fees already.  Many platforms also don’t have the ability to generate a digital consent-based workflow and revert to a paper trail, adding more administration to the adviser process.

“Newer technology providers such as WealthO2 offer useful features such as bulk emails and bulk reporting that can be customised by the practice, with electronic digital signature workflows that allow advisers to control the content and “push and pull” of communications to the client, storing the compliance documents and activating consent based workflows.

“Another consideration for advisers are the providers who have integrated digital signatures and alignment of adviser opt in and annual fee arrangements with the Reform requirements.

“Such offerings provide advisers with control of the narrative and branding of communications with their clients, which can give both sides greater peace of mind,” Ms Bernasconi says.

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