Everyone seemed to know there were more enforceable undertakings (EU) coming after AMP's were revealed last July.
However, while rumours suggested more would surface at AMP, the majority of industry talk centred on another sizeable dealer group being the focus. However, AMP has distracted us for the time being with the revelation an additional 28,000 clients need to be contacted after it already had 7000 calls to make following last year's EUs.
ASIC is being tight-lipped about further EUs and Deloitte has been employed as the official independent expert by the corporate watchdog. AMP's latest announcement is going to cost the company a considerable amount in contacting clients and image damage control. There may also be an issue surrounding adviser retention.
This is an area where dealer groups are struggling. Genesys and AMP are just two groups that have recently announced they are working to pool their fund manager commissions and use them to pay advisers.
Other groups are looking to make the pool into a fund in which the planners have a long-term interest. While most funds continue to pay some sort of commission or rebate, dealer groups are looking at the systems creatively to make them work in their best interests.
How dealer groups move to become or stay profitable, attract and retain planners is going to be the most interesting question in financial services. It is a question closely followed by: if dealer groups are not viable, what will replace them?
