How the Royal Commission is influencing the general perception of Financial Advisors
Some commentators on the current banking Royal commission paint a picture suggesting you can’t trust any financial advisor. Most reporters suggest Financial Planners lack best practice values, which to my belief is a sweeping generalist view.
I challenge the reader to separate the two and acknowledge that institutionally owned financial planning groups are very different to boutique financial planning groups.
The banking Royal commission has identified institutionally owned financial planning groups, which currently make up 59% of all advisers (according to the ASIC financial advisor register in April 2017), are more likely than not to have financial advisors focus on the sale of aligned products, not necessarily strategy and advice.
So how true is this and what does it mean for the other 41% of Advisors?
AMP, NAB, CBA all household names, have all failed the moral trust test. How can any of these organisations charge clients for services they never rendered, and in some cases have lied to the regulator (ASIC) and then simply offered a hollow “I’m sorry”?
It is obvious the real problem is systemic within the larger end of town and it makes sense that the major financial institutions are on trial.
Trust is the cornerstone of any proper professional relationship
I for one believe in developing sustainable Trusted Client Relationships. Trust is the cornerstone of any proper professional relationship and even more so when you’re dealing with someone’s future, their wealth and with the aim to be their trusted advisor.
As a financial advisory firm, our credo is simple, our clients come first, second and third, with any product recommendations being completely agnostic.
We aim to be a trusted advisor with our clients and understand trust needs to be earned.
Our ethical framework, transparency and fee-for-service approach means we are never compromised to “sell” a financial product, because we are all about building a two-way trusted relationship where we provide knowledge for an informed decision to be made and then have the privilege of guiding our clients along the path that would like to go.
So here’s what I recommend to look out for when engaging a Financial Advisor:
- If your financial adviser does not provide strategic advice before recommending any products, then maybe you need to think rethink your strategy
- If your financial advisor is part of a group that is owned by a financial institution how broad is there list of products that can be recommended to you, and how many of those are owned by the owner of the financial institution?
- If your financial advisor does not charge you a fee-for-service your best interests may be compromised because the adviser is most likely driven to sell you a product from which they derive a commission
My hope is that the Royal Commission will decide to breakup these large financial institutions and that the outcome will mean products, advice and the way it is delivered will be on terms of Best Advice not products.
We watch on with anticipation!