Website encourages churn

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The man behind the merger of Guardian Trust and Perpetual Trust is causing waves in Australia with a site that pays commissions to customers rather than advisers, and essentially encourages churn.

Monday, November 17th 2014, 6:00AM 4 Comments

by Susan Edmunds

Australasian Wealth Investments (AWI), which is headed by Andrew Barnes, has established a website, YourShare.com.au, that promises to give Australian consumers their share of $3 billion paid in commissions to advisers every year.

Barnes most recently came to prominence in New Zealand after buying Perpetual Trust for $12.3 million from George Kerr’s company Pyne Gould. Before that he established Australian Wealth Management, a spin off from TOWER Australia.

He says a New Zealand version of the Australian website is a possibility.

The site collects the fees and commissions generated by sales of insurance, mortgage and investment products and gives half of the money back to consumers, above $75.

Barnes said consumers who registered with the site were, in effect, moving their asset from one adviser to another. “But adviser B gives a proportion of the commission back.”

Consumers receive no advice via the site but Barnes said because products could not be set up via the site, those who needed advice would already have got it.  “All it’s really doing, is effecting a transfer in such a way to get the rebate back.”

Some customers would have bought the products directly from the provider before transferring to YourShare, he said.

Barnes said it was not a threat to financial advisers because the site’s clients were usually those regulation had made advising too expensive or time-consuming. “Nine out of 10 times these customers are orphans.”

A large part of the financial services market had been disenfranchised in Australia under FOFA and RDR in Britain, he said. “The challenge at the bottom end is you’ve got a lot of people who are no longer on the radar of advisers. If an adviser actually engages with smaller customers, they have to go through a full fact find, it’s breathtakingly uneconomic.”

He said there was a possibility of something similar to YourShare working in New Zealand. He said the concept would work but New Zealand’s regulations were not yet as strict, so the problem of “mum and dad” clients’ access to advice was not so acute.

But he said it would work in any market where commission as being paid. “The client has the ability to say ‘I’d like a piece of that’.. it’s probably an inevitability as commissions come under pressure.”

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