"I dont see why financial advice can be any different".
Just a Guy there are two business strategies for success in financial services and they are mutually exclusive - let me explain:
The first business strategy is to have the best product period (product leadership / differentiation). In this business model you spend all your money and resources developing the best product in the market and hope that the industry will use the best product.
The second business strategy is vertical integration / distribution. Under this strategy your competitive advantage is the distribution you have. Under this business strategy a business loses money on distribution functions (AFSL's and licensing) so that they make it up by selling high margin products (high margin products are great for a business / shareholder but bad for an end client as the end client prefers the best product at lowest margin).
The reason these strategies are mutually exclusive is that if you had the most competitive products you wouldn't need to lose money on the AFSL's and "distribution". And visa versa if you are spending money on distribution you can never compete on product with a "product leadership strategy business" because their business model would take the money you lose (say $50m a year) and invest that into the product.
To put this in the analogy of your primary healthcare example advisers are sending clients to the local blood-test which is premium price for inferior analysis. They are doing this because this is the vertically integrated business model. Yes the regulation says that they cant really do this but this legislation isn't really working as it is being policed by......primary healthcare (or in case you aren't following the banks own AFSL's). Surprise surprise the policing isn't great so there are calls for vertical integration to be broken up to so that the current laws that already exist are acted on.
Now this is only one aspect of IOOF's problems to do with one side of its business (the competitive position of the platform business) and as I have said before the effect of this would be to normalise the margin (lower) the margin in the platform business as they need to compete head of (best interest duty) with the independent platforms. If this was IOOF's only problem I would probably look at the company more closer. I see far bigger problems on the financial advice side of the business if the royal commission outcomes go the wrong way (clients needing to consent to their fees or pay the advice fee directly).
IFL Price at posting:
$6.90 Sentiment: None Disclosure: Not Held
(20min delay)
