IFAAA president Daniel Brammall – who is also a director of ACT boutique Brocktons Independent Advisory – said clients were increasingly googling the term “independent financial advice”.
“Commercially, independence is a subject that is worth solid gold,” Mr Brammall told delegates to the recent IFAAA symposium in Sydney.
Mr Brammall suggested the IFAAA’s website – which lists members compliant with the Corporations Act definition of independence – receives a huge amount of traffic as a result of such searches, with an increase in recent months due to parliamentary and media attention to financial advice licensing issues.
“We don’t have the time to advertise or market, but I know that several hundred leads a year are coming through the website which are just from Google searches,” he said.
IFAAA member and fellow Brocktons director Susannah Kulincevic suggested her business is regularly approached by the public with questions around independence.
“The two most common questions are ‘How can I tell if my adviser is truly independent?’ and ‘Where can I find the truly independent adviser?’” she said.
Another IFAAA member, Fergus Hardingham from FM Financial Solutions, has also received traffic via internet searches and said his clients chose an ‘independent’ because they were scared of being swindled.
“They are using the words, ‘We don’t want to be ripped off, we’ve read bad news about you guys’,” he said.
Meanwhile, Roskow Independent Advisory principal Matthew Ross suggested that while consumers who specifically target independent advisers may not be widespread, they tend to be ideal clients.
“People who google ‘independent financial advice’ are smarter than the average bear,” he said.
“The clients who come through our door get it and they see the problem with the alternative.”
Andrew my farewell was sincere – I don’t take pleasure in being condescending to anyone.
We will continue to disagree RE: independence – the beauty of a free country. Enjoy your evening.
Craig – concur robust debate is fine – personal attacks perhaps should be left for another forum – the type I would not want to visit.
The fact is Craig, I agree with you too!
But mate, you have to realise we’re not as conceited and divisive as you think we are.
Elements of this article may get under your skin, but please don’t assume we made these comments with the intention of doing so. I’m not suggesting Aleks and Stefanie are doing that either, but you know, they need to write engaging content that promotes healthy debate just like we’re doing – that’s why they win awards and are successful in their own trade.
Hi Anti V-I:
Well…..a closed forum for only those that agree with the same ethos…who would have thought!
The Protectionist Form perhaps?
I think you will find that this a public forum open to all who may wish to contribute to debate on important issues or would you prefer to have every contributor singing the same club song?
It appears that your idea of industry cohesion is when every other contributor agrees with the ideology of the vocal minority group.
The benefit of robust debate is to allow differing opinions and points of view to be heard, thereby highlighting valuable issues that may not have been considered had it been entirely controlled by a group with a solitary and narrow focus…..you know, sort of like a big love-in !
….and if you think I am FPA,Bank aligned or participant of VI….then you are entirely wrong.
Never have been, never will be.
Fergus, my comment was tongue in cheek. To have the absence of conflict there must be no traces of reward. This is quite impossible as you know. And as for you taking profits from the business that directly benefits from the advice you dispense to your clients. I should imagine that’s a 100% conflict. Now if you were an employee on a fixed income dispensing advice as per your model, then you would be truly independent. I’ll close with my own condescending farewell. Toodleoo
Andrew your words were:
“The only way to be truly independent is to not charge a fee at all”
Independence does remove 99.9% of conflict – the only conflict our external auditor said we had – was that we own our own business.
Bad advice comes from a range of sources including FREE advice…it is just that bad advice is more likely to come as a result of a conflict. Hope this clears things up.
Have a great day
Craig, you can see the honour roll of banned conflicted advisers on ASIC’s website. Count them if you wish. Whilst you’re there, see if you can count all the independent advisers who have been banned and get back to us with a figure. Of course ASIC reports only the one’s that have been caught.
As for your wish for the entire industry being cohesive and focused, you forgot to add a caveat that you don’t mind anyone rubbishing the industry funds, unions, any politician who disagrees with you.
Absolute cohesion and unity are ideological pipe dreams aspired to by elites, cartels and socialists. Wouldn’t have pegged you for a lefty now? Why won’t you let the free market decide? If independents are so small, what’s the worry any way?
Fergus, at no point did I say independence equates to working for free. My argument is that independence doesn’t remove conflict or bad advice. Once you put a dollar value on a client you treat them accordingly unless you are charging all of your clients the same fee?.
Hi Craig…it is hard to say that there are MANY bad advisers who are independent as there are not many independent advisers – so by default there can’t be many!
Have a great day.
Craig, you seem to be getting very personal for someone that supports industry cohesion. This is forum for independents and those that support the spirit of it, not an FPA ‘let’s all be friends’ bank love-in.
To Fergus Hardingham:
Are there “MANY bad advisers who are paid commission” Fergus???…if so,how MANY?..
And are there ANY bad advisers who are NOT paid commission and who are independent???….and do you also tell your clients that there are MANY great advisers who are independent, but unfortunately, there are MANY bad advisers who are independent??
To Matthew Ross: Ok, you deal with all the smarter clients who can Google and the other 98% of advisers around Australia will just have to settle for average bears. The reason they see a problem with the alternative, is that they are told there are problems with the alternative!
The fact is Matthew, that I actually agree with you in that consumer confidence in our profession is paramount, but it is conceited and divisive for the independents to continually push the line that there is only one option that will allow the consumer to achieve confidence. The problem is much bigger than being independent or not.
Hi Paul,
Maybe you would be asking the question of the IPA or other accountancy groups and not the IFAAA.
Have a great day.
Does the IFAAA have any accountant members who recommend SMSFs, then charge fees to administer them? Is that regarded as conflicted remuneration?
Andrew, I am sorry that you believe that working for free = independence as you are incorrect.
Independence is being independent of any sources of conflict…if your client and only your client pays you – then you are working for the client and not a 3rd party who pays a commission or other incentive (that is why commissions were invented – as an incentive to sell).
Charging an appropriate fee for advice should be profitable – or else none of us will continue to be in business…but charging a fee for advice is not a conflict…selling a product that pays a higher commission may be good advice or it maybe bad advice – better to remove the commission and thus the conflict – then charge the client for your services and skill and the client is more likely to be better off. Again the IFAAA recognizes that there are some truly great commission remunerated advisers…the IFAAA simply thinks that it would be better to remove the ‘conflicts of interest’
Fergus,you could be the greatest adviser that ever lived but the conflict will always remain because our livelihood is determined by charging the client sufficiently to be profitable as a business. so whether you source revenue from product or directly from the client is irrelevant. The only way to be truly independent is to not charge a fee at all.
Craig, firstly RE: “they believe they satisfy that definition”…we do more than satisfy Corp Act of Independence.
Secondly the industry is being the target of unwanted press and scrutiny because of bad advice – the result of conflicted remuneration.
We always when we talk to clients say that there are many great advisers who are paid commissions, but unfortunately there are also many bad advisers who are paid commission – and the fact is that conflicted advice increases the chance of poor advice being provided.
Get rid of the conflict and the standard of advice will improve – it won’t be perfect…as each adviser has different capabilities, but it will also mean reduced risk of products being sold to benefit only the adviser and more focus on the client.
No Craig, you are wrong.
The IFAAA is not pushing that message. That’s you putting words into other people’s mouths (yet again).
Operating in an independent manner gives many consumers greater confidence in seeking financial advice compared to what they have experienced in the past.
“Fergus Hardingham’s client’s believe there is no risk of being “swindled” or “ripped off”…unless you’re a mind-reader or have just conducted a survey of Fergus’ clients, you simply made that up Craig, so right back at you mate, exercise great caution in the language you’re using.
[quote name=”Dean”]I’ve often wondered how advisers who don’t accept insurance commissions manage the situation when a client is declined cover. Does the client end up paying an advice fee for the privelege of knowing that they are uninsurable?[/quote]
Is there less work involved for the adviser when a clients policy is declined??
Dean, we are vary of clients paying for advice and then not being able to secure insurance (as in your example)…hence why we do pre-assessments if we are in doubt. Nor do we want to pay the cost as a business if the client can’t obtain cover.
Craig, good advice comes from all parts of the finance industry as does poor advice…most of the poor advice has been due to conflicted remuneration skewing the advice away from the client’s favour. What I was quoting is what clients have said to us is their reason for seeing us. I am not saying that non-independent advice is bad – the client community is saying this.
Andrew, we are certainly not advocates for working for free (nor being paid commissions which are not related to advice but to product) – hence why we charge our clients a fee for the provision of advice.
Independence in our view comes from being paid by the client and not another party…and you are entitled to your own view.
To Anti V-I:
I wasn’t commenting on the Corporations Act’s definition of independent.
What concerns me is the persistent inference and promotion from the IFAAA members that because they believe they satisfy that definition, it somehow provides the consumer with a higher standard of advice and a reduced advice risk which may otherwise be received from an alternative source which does not operate under the same ideology or model.
At a time when the entire financial advice profession must be cohesive,and focussed, the IFAAA members continue to drive an ideological wedge between themselves and the great majority of the advice profession in Australia. We must remember they make up a minuscule percentage of the total advisers and yet there is good and poor advice provided regardless of the business model.
At some point, there WILL be a “true independent” adviser that will unfortunately steal clients funds or provide appalling advice and then there will be silence.
Yes Dean, advisers should charge for any work they do. You have to be very clear about what you’re charging for, and have a conversation about the possibility of getting declined, or a premium loading, before they engage you. Especially if their chances are obviously poor.
This way you don’t need commissions from other clients to subsidise the non-paying jobs.
I am continually frustrated with the term independent. I am a self licenced non-aligned financial adviser. I dont have to choose any one particular insurance provider over another. The same goes for investments. I can engage any client of my choosing and conversely disengage them at will. I charge a fixed fee based on the work involved not the amount under advice. The only thing in my way is accepting the commssion on insurance products and yet at no point in my career have I had a client question my integrity as a result of this. They are happy to do business with me as a result of my being non-aligned which they see as being independent. No one in business does anything for free. Everyone accepts this. So what does it matter where I source the revenue. What’s more important to the client is that they are aware of how it is generated and the value it represents.
Ah, Dean…yes! That’s what advice is. It’s not like sales…
Craig, it is not THEIR definition, but the Australian common law’s! You might support widening the definition and there is a legitimate argument for that but it is hardly propoganda from this group.
Fergus Hardingham’s client’s believe there is no risk of being “swindled” or “ripped off” because their adviser is independent.
Matthew Ross’s client’s are smarter than the clients of the vast majority of Financial Advisers.
Susannah Kulincevic’s client’s use exactly the same marketing term of “truly independent” when asking a question as the IFAAA use every time they comment….what a coincidence !!
I believe the members of the IFAAA
would be well advised to exercise great caution in the language used when discussing their business model compared to alternatives with their clients regarding the inference that if the client were to choose to engage an adviser who does NOT fit their definition of truly independent, they will be significantly increasing their risk of receiving substandard advice.
The very obvious push at present from the IFAAA is that if you engage their members for advice, your advice risk is reduced.. which is blatantly not correct.
I’ve often wondered how advisers who don’t accept insurance commissions manage the situation when a client is declined cover. Does the client end up paying an advice fee for the privelege of knowing that they are uninsurable?