As the full extent of the issues plaguing the financial planning arm of Commonwealth Bank of Australia were laid bare, Professional Planner asks: are vertically integrated business models appropriate in a post-Future of Financial Advice (FoFA), professional world?
Don Trapnell, a director of independent licensee Synchron, says vertical integration is the greatest threat there is to financial planners discharging their best interests obligation, both in accordance with the FoFA, and professionally.
Matt Lawler, chief executive officer of Yellow Brick Road, says “vertically integrated businesses are not evil, as long as they are managed properly”.
“What you’ve got to do is make sure the system works from the client backwards, and that you protect the sanctity of the adviser client relationship,” Lawler says.
And Mark Spiers, general manager of advice for BT Financial Group, says vertical integration gets a bad name when things go wrong, but more often than not it isn’t the business model at fault but the culture of the organisation.
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