KEY POINTS:
In his news story detailing the potential 'alliance' between Axa and the financial advisory firm Gould Wealth Management, The Press journalist, Alan Wood, neglected to mention his source. Which would be me .
Sorry, no link to your story Alan but mine's better
anyway.
Petty journalistic squabbles aside, however, the Gould/Axa flirtation is interesting for a few reasons. Partly, it's a good story because of the messy history of Gould Wealth Management - which rescued survivors of the MFS/Vestar train-wreck - and the personalities involved. But it's also a great example of the perennial love/hate relationship between financial institutions and advisory firms.
In an ideal world financial advisers - or at least those who identify themselves as 'independent' - would select appropriate investments for their clients based on the merits of each product regardless of who supplies it; the manufacturers, such as Axa, would compete for the business merely on the quality of their offering.
In the real world financial advisory firms, especially those organised into medium to large networks, struggle to survive without cutting some kind of deal, or deals, with manufacturers; who in turn get sick of marketing to a disparate bunch of advisers with erratic results.
Where the two meet is called distribution. In return for capital, fee discounts or some other form of business support, advisory businesses hand to financial institutions the power to exert influence or control - there's a fuzzy line between the two - over adviser product choice.
This doesn't necessarily mean that clients will get poorer advice or worse investment results but it does tarnish the 'independent' tag most advisers love to wear. I think these relationships are fine as long as they are explicit, transparent and clearly disclosed to clients - including how much business is placed with the 'allied' institution.
Whatever deal Gould does - and my instincts tell me the current owner would love to generate a quick return on the bargain basement price it is alleged to have paid for Vestar (about $5 million, according to my sources) last July - the group may have to revise its 'mission statement' .
Axa will also press on with other 'distribution' deals, including one to wrap up five firms in a new advisory chain, mentioned in Alan Wood's story.
"He would not name the firms involved," Wood writes. I could - but you'll have to steal that from my next story
David Chaplin
