Count Financial Group (Count) has declared its intention to restructure its business as a result of the Future of Financial Advice (FoFA) reforms announced in April.
Count will apply for an additional AFSL in order to supply products and services, acting as an IDPS Operator and RSE. The group will leverage its existing strategic platform arrangements to execute the transition.
… the decision to transform the business was made largely because of the proposed ban on volume-based payments
Andrew Gale, Count CEO, said the decision to transform the business was made largely because of the proposed ban on volume-based payments from product providers to dealer groups. He said that in order for Count to continue to fund its services it was necessary to maintain margins.
“Of all the reforms the proposed ban on volume-based payments was of the greatest significance to Count because of our current business model,” Mr Gale said.
Mr Gale believes that the model proposed by the Government (whereby volume-based payments can be made to platform providers) favours ‘vertically integrated’ businesses, because they could “… exercise discretion as to where they realise margin in the value chain.”
According to Mr Gale around 60% of the group’s current revenue base comes from volume-based payments.
The transition is planned to coincide with the Government’s reform milestones, namely the release of draft legislation (expected late 2011) and the commencement of legislation from 1 July 2012.
Mr Gale also took the opportunity to outline Count’s response to other key reform areas.
In relation to opt-in, Mr Gale said that he did not think the reforms were in the best interest of clients, largely because they would push up the cost of advice.
I think it’s pretty obvious that this could lead to potential distortions in advice
Similarly, Mr Gale expressed concerns about the unintended consequences of banning risk commissions inside superannuation. “I think it’s pretty obvious that this could lead to potential distortions in advice. It would be more preferable to make the distinction based on either group or individual insurance, rather than inside our outside super,” he said.
Mr Gale reiterated that Count continues to maintain a strong focus on growing its wealth protection and estate planning business, and said the group plans to expand its panel of insurers. He said that even with the proposed reforms he anticipated growth in this area of the business.
