Like most people who have worked as a financial adviser (yes, the majority), I resent the overreach in legislation that is causing costs to increase, good advisers to leave the system, and everyday people to miss out on advice as it becomes unaffordable.
However, I am now beginning to understand, and at times even sympathise with the actions of ASIC, AFCA, government, mainstream media, and also the consumer organisations.
And that kind of horrifies me.
In my new role after I had to leave advice provision for family reasons, I am educating consumers on how to find good advice, how it works, how to engage, how much it costs, why it costs so much, and what they can get out of advice that will make it worthwhile. This has been my passion for a long time, and I really enjoy this part of my new business offering.
Increasingly though I am seeing the reasons why people don’t trust advice, think it is overpriced, feel ripped off, and hate the industry and think losing the whole thing wouldn’t be so bad.
It is the minority. I still believe that. I have to hold onto that.
I used to read the case studies of advice and see adviser profiles in the industry mags, and wonder why it was considered that what these advisers were doing was so special.
Of course advisers have to meet client needs, be compliant, focus on the whole client and not just their investments or super right? Of course we have to improve their situation, give them high-quality solutions that are not product focused and provide a service that actually makes them better off and be happy to pay for an ongoing service. Isn’t that what advisers do?
I considered that the advisers profiled and the services they were providing were the norm and in the absolute majority, and other than the services provided by some employees of some of the large institutions (who have now been called out) most advice provision was like that, with the occasional “bad apple” doing the wrong thing.
It is not all like that, and we need to act.
I review advice for consumers, and increasingly I am being referred to clients by good advisers who do advice really well, but who are seeing previous “advice” that is not up to standard. When I say “advice” in this sentence, I mean confusing, non-compliant documents, product flogging, fee gouging, unethical behaviour and stuff that are not in any way in the client’s best interests that are being passed off to the unknowing consumer who is desperate for assistance as “advice”.
A year after the Hayne royal commission, this shocks me (and the referring advisers) to the core. Is it any wonder that the complaints industry is becoming bigger than the advice industry?
And when I see this – those words come back loud and clear – HOW DARE YOU?
How dare you do this not only to the people who are paying you and trusting you, but to the rest of the advice community?
How dare you pass yourself off as a financial adviser?
How dare you take money for the templated, unresearched, uncaring rubbish your juniors are producing and you are charging high fees for?
How dare you, and how do you sleep at night?
You are making it harder for every hardworking ethical adviser who is trying to make a difference in their client’s lives. The advisers who put up with the compliance and paperwork, the extra study, and reduced income, and the reputational damage they don’t truly understand because they love helping people and know they contribute.
You are making it harder for every mum and dad, or retiree, or widow/er, or divorcee, or young person who needs help navigating our complex financial systems.
You are making it EASIER for legislators, ASIC, AFCA, mainstream media and consumer groups to justify their criticism and drastic actions. You are helping super funds and direct insurers to flog their inferior intra-fund offerings and insurance products with pre-existing condition clauses as a better option to advice.
What can we do about it? I have been losing sleep wondering about this.
Apart from referring clients to a service like mine, where I can assist with lodging educated, knowledgeable complaints for clients and make sure these “advisers” are held to account, what can you do?
Please, stop being so nice. If you see bad advice or hear about bad advisers from somewhere, you have to take action, not just shake your head and do a good job yourself. Call it out, explain to the clients, lodge a complaint, encourage the clients to act, write blogs or articles for consumers and tell them what they should be getting.
Do videos online, encourage your clients to talk about their good advice. Report it somewhere. You have to prove that you are professionals not just in what you do, but in the influence you are having outside your own door. Some of you are already doing this – thank goodness. But when it is so tough and you are so busy of course it is hard to put effort into this.
All of the good work the best advisers are doing is not going to be enough to save the profession if these other “advisers” keep getting away with it. And if consumers don’t know that the rubbish is rubbish and think that is what everyone is doing and that is what advice is; the situation is not going to improve.
Don’t sit back and let this happen. Your PI Insurance premiums are going up because of these guys. You are being shadow shopped and scrutinised because of these guys. Your profession is considered a dodgy “industry” because of these guys. You are suffering reputational damage and being shamed because of these guys. Direct the legislators the right way to the people who need to be scrutinised.
It is time to act – because of these guys.
Melinda Houghton, financial relaxation consultant, Insider Out
Financial relaxation consultant, what a joke. If you are serious about helping people be an adviser Melinda and do it well. Not sit on the sidelines and pot others. How dare you without a license have the right to tell a customer whether the advise is good or bad, that is advice and you are acting in a manner that should be banned.
I agree that a fair degree of advice out there is confusing and not clients friendly but I am a bit confused about the service you offer Melinda… if you are reviewing advice and providing an opinion isn’t that then advice…and you would need to be licensed????
Hi Susan, no I do not provide advice.
I give factual information and opinions on advice quality and suitability to their personal position (not product related). I then refer the clients back to their adviser with questions if needed. It is a fine line, however 25 years experience in financial services means I am very careful not to cross that line.
A lot of the questions asked by clients are around fees (are they fair?), strategy (what does that mean?) and how the whole financial planning thing works. That is usually factual information and in relation to fees is generally information relating to why advisers have to charge what they do, and what the likely benefits are.
In many cases I am just translating for clients and giving them peace of mind that their adviser is following due process and charging what they have to. In rare cases where legislation is not followed, there are severe conflicts or risks, or there are no justifications for the strategies the adviser is suggesting then I refer back to the adviser for more information for the client. I do not say do this, or don’t do that. I say ask this, and check that.
Love your article and your vibe. I too have reported a bad adviser to ASIC and he is now in jail. The issue is this is all reactive and not proactive. This is why I left tax accounting and became a financial adviser. We need ASIC to be a gate keeper and not let the foxes into the hen house in the first place.
I report people to ASIC regularly, most of them are ex financial planners who now call themselves financial coaches and unlicensed accountants however a few are bad financial planners. At least a financial relaxation consultant is different
It’s great to see someone actually advocating and encouraging people to seek good advice (rather than Scott Pape’s DIY approach), especially after all the negative press our industry has received in the last few years. I hope Melinda is very successful in being able to convince more people to see an adviser.
I for sure don’t want to see my PI insurance premiums continue to rise as they are. But lets face reality, I have seen myself and heard from other adviser friends, some horror stories of advice provided to people, where they have been left in a worse position than they would have been in if they didn’t receive that advice.
No offence Melinda, but I hope the complaints advocacy side of your business is a service that is only used on limited occassions, meaning people are receiving good advice.
I have looked at Melinda’s service in a different way to some of the comments here. If you are providing good advice to your clients, Melinda’s service will advocate for you and encourage those clients to be clients for life and refer their friends to you.
As she says, complaints are bigger than the advice industry.
We live in a world where red tape is seen as the cure of all evils without adequate consideration of the impact. Someone hits someone over the head late one night so Lock Out Laws are introduced. A small group of young children are tragically killed by a driver way over the alcohol limit and facing numerous charges has lead to an outcry for the alcohol driving limits to drop from 0.05 to 0.00 The implementation depends on who garners the most support. The hotel groups lobbying eventually sees Lock out Laws dropped. Why do we wait for collateral damage to occur before we act? Leaving regulation up to the politicians is hopelessly inadequate. Hayne is one man with one view of the world. Even he would have expected that the implications of his proposals would be thoroughly assessed before being implemented. It is incredulous that the politicians beat their chest and claim victory by proposing to implement every proposal with no consultation. Advisers have been left out to dry. The regulations will choke the industry in ways that noone considered. Quality advisers will leave. Big instos will get bigger. Young graduates will show their limitations and will have no mentors to guide them. A service built on personal relationships will be replaced by soulless institutions that treat customers as numbers and a means to pursue their own ends. The shameless self promotion by industry funds confirms they are not the panacea they claim to be. A large market correction will bring an end to their hubris. The collateral damage will be all the customers sucked into their high growth funds mascarading as balanced funds.
Im tipping a lot of your business revenue comes from advocating and being the representative of clients in complaints (covertly or not). You have smartly set up a website and promotion that doesn’t look like you are an evil lawyers ambulance chaser type, but attracting clients nonetheless. very smart marketing. hats off.
Melinda, but you’re a member of the FPA. I don’t know how you can ask me to remain silent and yet you remain silent on the FPA’s Professional Partner Program. A program that gets “member fees” from firms that were found wanting at the Royal Commission. These are your fellow “members” that charged dead people fees, charged fees for no service and the FPA have not imposed a single fine, penalty sanction on your fellow members. It’s a program which allows these “members” to quote “shape the future direction of advice”. Have you gone back to the FPA and asked just how have these firms, “shaped the direction of advice in Australia” and why your “members” have not faced any fines or actions? Surely this relationship is something you should be voicing an opinion.
Thanks to everyone who has read the article. I have received dozens of supportive messages via linked in, text, and via my website. To those who read this and feel attacked, I am sorry that you see it that way. Can I suggest you read it again? If you still feel attacked perhaps you need to ask why? I support good advice, I refer people to advice, I write articles and tell people how great good advice is. And I do not ambulance chase or lodge dodgy claims.
To the brave anonymous person who has compared what I do to Scott Pape – I hope you research for your clients better than you did prior to making this analogy since I send people to good advisers every day.
And to Phil et al, just to let you know, people who provide rubbish advice have NEVER been my former colleagues and will never receive my support. The problem we have is an industry who locks down and supports everyone in the industry, turning a blind eye to the negligent, horrific things that are still happening and this is partly why we have the problems we have.
To those good advisers struggling and possibly leaving the industry, I am sorry. There is support out there I hope you are reaching out for it. I talk to advisers regularly and it is really hard to do what you do right now. Please ask for help.
The point of my article is that legislation has gone too far. Scrutiny has become ridiculous. So send the scrutiny to those who deserve it and take the heat off the good advisers. The only way to reduce the overreach in the future is to fix the problems now.
My point is that the constant criticism of the bad apples in the industry increases the red tape we have to deal with.We know too well that the good apples have no public voice and hence we all get scarred with the same brush. That is a fact. The perverse reality for me is that we have great relationships with our clients who have had great outcomes from our advice over many years but I cannot deal with all the red tape. The regulators don’t understand the stress this puts on our business and crossing all the ts becomes secondary to looking after clients. We have no choice. Consequently I no longer enjoy coming to work – the stress is too great – and life is too short. I have never understood why advisers feel the need to criticise other advisers. I have never had the time or inclination to do that. Clients come from referrals from existing clients so any perceived increase in the professionalism of the industry will have zero impact on my business.Businesses like yours and Barefoot are free from all the red tape, encourage more red tape and are parasites feeding off the perceptions you both create that advisers are flawed.
I did not suggest you protect poor advisers, of which there are many – anyone who read anything about the Royal Commission could see that – we hardly need another expert telling us so. My point or question to you is – so you feel that all the regulations are fair and reasonable? Do you think the vagueness of Standard 3 and 7 is ok – to leave good advisers in business limbo? Do you think it’s possible that Frydenburg etc might tick and flick these without clarification, because of all the media ( including you) experts telling them how bad advice is? And that this might leave your former colleagues ( the good ones) in a difficult position? At base, anyone whose been in the game longer then 10 years will have had moments of weakness or error in their advice career – to say otherwise is delusional. But when those who are now ‘out of the game” want to come back and, in my view, further add to the stress, then I’m entitled to my view just as you are. And, similar to our former FPA Chairperson who also ran a business, in my mind conflicted, helping people get paid through the Complaints ‘system’, you too are conflicted now. I wish you well in treading the fine line of giving an opinion without giving personal advice. But I’ll stick to documenting my advice so clients have a solid form of recourse.
This is Phil.
I have the same experience as Melinda. Much of the advice that I see makes me uncomfortable in one way or another. The demand has changed – there is less acceptance of bad value for money advice and substantial demand for professional advice.
Melinda – great, well written article. I agree with you too Philip from Perth. I was an adviser 10 years ago and still work in the industry, and know what good advice should be. I now have built a family and have more assets, and you may say I’m what they call a HNW client so I can afford advice. Let me say that my personal experience is that good advice is hard to find, even if you can afford it. I’ve searched for 3 years to find a good adviser because I believe good advice can have a great impact. So Melinda is right – there’s a lot more bad apples out there than you think. A lot of what’s been pushed onto the industry is our own doing so stop blaming others and do your bit to turn around a great industry. Lastly, I have found an adviser that shows they care, through their actions and very well considered advice, so yes good advisers are still out there, making a difference to lives. Consider whether your own advice is having the same impact on your clients.
Sorry to say but this is nothing more click-bait drivel for pure self promotion. I guess as more and more ex-advisers style themselves as coaches and consultants to build a business which can sit outside the regulatory burden of ‘advice’, we will see only more of this type of content – zero substance!
One of the FASEA standards seems to infer that advisers who come across bad advice should lag the adviserin. Its not clear to whom, and how. Most licencees would not touch such a complaint from one of their advisers
The FASEA Code is clear on us holding each other accountable. When we see bad advice or bad behaviour, we must call it now. At present our Licensee (whomever that might be) is the current Code Monitoring Body, so it is to that entity that we must report. The standard that you walk past is the standard that you accept. A business such as Melinda’s would not need exist if we all met the high standards required of a Profession. The medical profession, by way of example, has operated with self and peer reporting for a long time and the way they deal with complaints seems to work well.
Can i ask what take you have on advisers who in trying to get new business convince clients that they have some how been wronged in order to win that client. I have seen on a number of occasions good advisers having to defend themselves for months on end and win the case to be left in financial hardship, mental health issues and so on just because another adviser was trying to win business.
That is shameful behaviour and shouldn’t be happening. Fortunately I have an inside perspective and will never help someone to lodge a complaint that is not valid. I always contact the practice first to gather more evidence from their side, and if a complaint is lodged it goes to the practice first to give them a chance to respond. Only if the response is not received or does not address the issues at hand does a complaint go further. I have been an adviser, and I promote good advice as the main part of my service offering. My goal is to encourage good advice not to nitpick if a t is not crossed or an i is not dotted. Minor issues can be fixed without major drama.
Yep, thats the standard process under law e.g AFCA. The licensee has to have the change to investigate first though you imply you are doing them a favour Mel. I got from the article, and now your comment seems to confirm it. Your services include a role as a complaints advocate – why arent you upfront about this? Why is it so covert? Lastly, I agree is the legislation has made it too difficult. Not because the standards shouldnt be high, the model is broken. Making insurance salesman, expert financial people was not going to work. And the whole way to make big money was to do unethical advice. Happy in any industry where such a model exists.
No; shame on you Phil and Wayne – what Melissa is telling you is that crap advisers are causing you this stress – NOT the regulators, who are doing the best they know how (without our help!) to sort the wheat from the chaff Perhaps if we good advisers helped ASIC better understand (ASIC – take note – talk to us and find out what we do and how; advisers – take note; talk to ASIC about your concerns on poor advice) who the bad ones really are. Instead, they bring down Terry McMaster and leave the crooks and dodgy advisers (the ones Melissa is talking about) to continue until they’re eventually caught out. And here’s a tip: every adviser should invoice clients annually for fees for service (whether they’re collected by a platform or other service provider, or collected directly) so that all fees are agreed every year and no further fees for no services occur. Every profession does this and it’s one of the major reasons why we are NOT regarded as a profession And don’t come back with “we can’t afford to” because I’m a micro (self-licenced) business and I’ve been doing it for 27 years! Thanks, Melissa for expressing what many of us have known for decades and for doing so from an insiders’ perspective. Well done.
Are you saying Dover was not at fault?
ASIC’s actions did more harm to clients than Dover’s actions.
You can’t be serious
You assume advisers care about a professional title. Most just want to run a successful practise by engaging with their clients not the red tape and avoid the ambulance chasing lawyers that are building class action after class action. Philip from Perth we think you are a great professional. Now go back to your clients and leave us to look after ours.
Have you wondered why the ambulance chasers are building class actions? Anything to do with the things Melissa mentioned?
Yeah I’m just going to quit too.
Great article. True professions call out the worst among them – as they know a rising tide floats all boats.
Leaving aside the whole ‘human nature’ element to this which dictates that every single industry and profession has unethical and/or lazy people in it, there are a whole range of issues that sit ahead of these. For example the horrific standard of financial literacy in this country that allows seemingly smart people to be misled about fairly simple subjects. Also the choking amounts of regulation and the horribly misguided dispute resolution body that encourage templated behaviour lest you get your backside handed to you when a client takes a free swing at you. I mean ASIC even call it ‘safe harbour’. Doesnt scream provide nuanced advice to me. Just churn out what is safe and lets the regulators show what a great job they’re doing. Retail advice is dying. It is not commercial, it is full of risk to the adviser and the licencee, the regulation around it is cumbersome and horribly misguided, and all the poor client will have access to soon is robo.
With all due respect Melinda, but I might have to leave being an adviser for family reasons too – that is the stress caused by over regulation. So as much as you might be horrified by what you are seeing, did it occur to you that in your new role you are more likely to see the poorer examples? And the conflict of your new business, not subject to FASEA I note – well played, you escaped the regulatory clutches. But what you are doing is giving fuel to the overzealous regulators to bury us further – you are helping bury your past colleagues. Some might say shame on you.
My thoughts exactly.
Another conflicted business model. Barefoot sells books. You sell a service to bag advisers. The common denominator is that neither of you succeeded in creating an enduring service for your clients and now make money by criticising advisers that have by advising people not to use advisers. Both of you would have more substance if you offered your comments on a pro bono basis. Also your link to climate change to your article is unclear.
Couldn’t agree more, easy to sit back and throw stones when you’re not subject to any regulation.
good points – most of these commentators although know the theory and not the practicality of what we do