Instos offer advice at a loss to drive product sales: EY

In a world of heuristic hyperbole at last a sensible comment!

For all those bank bashing hypocrites - realise that some people prefer dealing with a large institution. We bash banks for being successful but ignore they are engaging in legitimate business practices. I find it amazing that we praise CBA and WBC for their share price performance; but cricitise the practices that generate the profits that drive the very same share price.

For all those Planners and Advisers working in or for bank-owned AFSLs - what is wrong with saying to your clients "I am honest, I am well trained, I'll give you my best advice but if there is a product solution to your problem I'll recommend a suitable one that is supplied by my employer/licensee. Does that present a problem?"

The answer may surprise you.

All good points Daniel. Yes I must admit it's all getting a bit bizarre. Would regulators perhaps like to make it mandatory that advisers recommend industry funds only? Would that make everyone happy then?

Before a banking customer is even given financial advice, they mandatorily receive and sign a Financial Services Guide which stipulates that the bank planner can only give advice on those limited products that the bank owns/distributes; this is once again reiterated in the Statement of Advice. Clients then decide they wish to receive advice on the basis that they are happy with this arrangement.

Most super wrap products are very close in pricing and offer all the same fund managers and features, so what does it matter? The fact that Macquarie Wrap charges 0.05% more than BT Wrap is not exactly going to destroy someone's retirement nest egg. Someone's super balance at retirement is 95% driven by asset allocation, not which bank owns your platform.