I’m looking forward to a time where a few unscrupulous operators can no longer tarnish the whole financial services industry with the one dirty brush.
The financial advice sector has been working hard to right these wrongs. Not only have individuals and their employers been disciplined, the profession has also set about targeting the education standards of advisers and the ethics they subscribe to.
If the quality of advice given to clients is improved, then it follows that investment strategies should better achieve an individual’s financial goals and objectives.
Introducing FASEA
So it pleases me to see that the Australian government has established a new body that will be responsible for governing the conduct of professionals in the financial advice sector. The Financial Adviser Standards and Ethics Authority (FASEA) will set mandatory educational and training requirements for financial advisers, develop and set a national industry exam and create a code of ethics that all financial advisers must adhere to.
One of the educational requirements changes dictated by FASEA is particularly pleasing. FASEA intends to lift the educational level of financial advisers to a minimum degree qualification. Thank goodness. Because who in their right mind wants to place their finances in the hands of a novice?
In my opinion, the FASEA changes are a step in the right direction to restore faith and lift the level of professionalism in the sector as a whole. Hopefully this will mean the types of scandals that have rocked news headlines in recent years will be a thing of the past.
However, as Hewison Private Wealth’s chairman and founder John Hewison recently acknowledged, what has been missing in relation to financial services regulation in the past is a lack of enforcement and co-operation by the government and regulators; the Australian Prudential Regulatory Authority (APRA) and the Australian Securities and Investments Commission (ASIC).
So until this happens, individuals have an important role to play in terms of determining who they choose to provide their financial and investment advice.
Clients need to keep away from the instos
What’s most important in a client and financial adviser relationship is ensuring the client’s best interest.
This is where financial advice subsidiaries of institutionally-aligned investors like the banks are flawed.
Think about it like this – it’s unlikely a client would walk into a shop and choose the first product offered to them by the salesperson without first comparing it to similar products to ascertain which best suits their budget and needs.
However, this is essentially what happens when a client approaches the financial advice arm of a bank. The adviser will generally recommend a product aligned with its brand.
If clients are after advice that is truly aligned with their goals and objectives, they need to make sure the person providing that advice is independent. Independent financial advisers exist to provide clients with independent, unbiased advice. They are committed to achieving positive outcomes for their clients and operate under their own Australian Financial Services Licence (AFSL). Further, they’ll they charge a fee for service and do not accept commissions.
Simon Curtain is a director and private client adviser at Hewison Private Wealth
Everyone has a level of self interest .. Bank advisers, Alligned, Non Alligned , independent and who ever else calls themselves and adviser.
What a joke. I left the IFA market to join a bank as I knew the dodgy practices I had seen at IFA’s would not be tolerated at the bank. IFA also have favourite products and the majority of clients end up being directed to these.
You’re in for a rude shock then. There’s still plenty of dodgy practices going on within bank financial planning arms.
the difference being with the IFA at least you knew there were conflicts, and you had a choice to leave if you felt it was inappropriate. Under your new puppet master you will be brainwashed into the way of the cult. You will be brainwashed at any cost to get more FUM.
Phillip your comment makes no sense. I can leave the bank if I want and I clearly know the conflicts. No brainwashing happening here.
Any and every adviser charging a “service fee” to every client they see regardless is dodgy. You know most of your clients do not need nor deserve such rip off tactics just so you can have a business model. The FP industry can coin phrases like “fee for service” all they like but 90% of your clients shouldn’t be charged a yearly fee charged monthly under the ACT of portfolio monitoring or “ongoing advice”. If your doing it you are a dodgy adviser. “Fee for service” is a sham, it’s a crock. It is just commission wrapped in a PC story to justify charging thousands of dollars year in year out. It is a con. End of story.
This is potentially one of the most offensive articles I have ever read, I am licenses by an “insto” have a 100% clean record and will walk away from clients or recommend they retain existing funds if I cant improve their situation.,
Hahahahaha!!! This guy is hillarious. Well, if the subject matter wasn’t so important he would be. I second the “knock to the head” theory, championed by ‘MB’, one of the other commentors. Self-interest MUCH . . .
What a horribly self serving article. The days of dodgy financial advisers have not gone. There are thousands of dodgy financial advisers out there masquerading under the title of “real estate agent”, “accountant”, and “roboadviser”. All have massive conflicts of interest, and are allowed to get away with murder due to lack of regulation.
As for licensed financial advisers, they are by far the safest and most regulated option for consumers now after the implementation of FOFA and particularly BID. FASEA is very minor in the overall scheme of things. Consumers would be much better off with a licensed adviser who doesn’t have a degree but is subject to BID, than with an accountant who pushes them into an unnecessary SMSF, or a real estate agent who recommends an overpriced property that will be a “fantastic investment”.
Whether a licensed financial adviser is paid by commissions or fees is completely irrelevant in a BID environment. Being paid by fees hasn’t stopped accountants from giving inappropriate advice. But BID does ensure that licensed advisers paid by commissions are acting in the client’s best interest. Commissions are just an advice and service payment mechanism that is cheaper and more convenient for many clients.
Well said. How did this rot get published
Overall clients will always have to be careful who they deal with in regard to financial planning advice. They will need to do their own due diligence as they should with any service they engage. Placing the Government in charge of our destiny was the biggest mistake our industry has ever made. We will regret it till the day we are all out of business due to cost and fear of litigation.
I think this bloke has had a severe head knock.
Its ironic that Curtain promotes his independent investment product to claim superior advice quality. Strategy and service are agnostic to product. Once again spin based on a vested interest.
Dodgy advice will always be around and if you think it is limited to institutionally aligned financial planning practices then you are deluded.
Any advice business that tells the world they are acting in the client’s best interests, yet 90% of new clients walk out with the same type of advice is still an issue. Don’t care if it is an FP making a recommendation for 90% of clients to go into their groups product or an accountant making a recommendation for 90% of their clients to set up an SMSF. Generally speaking these approaches are just as bad, and conflicted, as the other.
Is this an advert?