IFAAA president Daniel Brammall will be the responsible manager for the new licensee – to be named Independent Financial Advisers Australia – and is in the process of transitioning his Canberra-based practice Brocktons Independent Advisory across to the AFSL.
Speaking exclusively to ifa, Mr Brammall said the move will cater to those advisers who want to adhere to the Corporations Act’s definition of independent advice but are not willing or able to get their own licence.
“Financial planners approach us all the time to talk about how becoming independent will impact on them professionally and what steps are necessary to achieve genuine independence as an adviser,” he said.
“Their concern is that even though they might follow the principles of independent financial advice, and in some cases even satisfy [section 923A], their AFSL still permits other advisers to charge asset fees and receive commissions.
“It’s because of this that they can’t call themselves ‘independent’, and if there’s a scandal involving one of their conflicted colleagues then they’ll be dragged through the same mud.”
Mr Brammall said that while it is cheaper to self-licence now than in the past, that it is not the right path for all independent advisers and can be a “major distraction” from client service provision.
The new dealer group will be unique in that asset-based fees and commissions on all products – including risk and life insurance – will be banned for IFAA authorised representatives.
“There are mid-sized licensees who use the word ‘independent’ in their marketing material but a little digging soon shows that they permit asset fees and commissions, and many of them have their own white label platforms and products,” Mr Brammall said.
“In truth they’re far from independent. That’s where we come in.”
Demand for independent advice is on the rise from both advisers and consumers, Mr Brammall added.
As far as what Bachrach would say.
THIS IS JUST NOISE!A LOT OF FLUFF!
Rob your bang on. This is great news
“Regardless of business model that is used what is essential is that “good advice” (and I would add ‘Better’advice)is the result. My personal view is that adviser remuneration doesn’t automatically mean advice is “self serving” or indeed “better” or quite simply “any good”.”
If you were truly independent..you would charge for Advice only…and not have anything to do with product. Despite everyones best intentions we all have bias to product, based on administration, reputation of fund manager and other nuances that creep in, it’s human so really what we arguing about? If the client is fully informed under no illusion how you are paid and you give the advice best for them how does it matter to others how you are remunerated? Does any one question the cost of a LEXUS? when really it’s an overpriced Toyota? Does it stop people buying them? No, horses for courses…I say.
Wasn’t advice Craig, just an observation. You wrote “does anyone reckon Susie Munro can get any more agitated and one-eyed?” and it was a sign from heaven you might be a bit of a bully.
I don’t like bullies.
In any case Craig I don’t think you should be so threatened by these conversations. It is very unlikely that % of FUM or commissions are going to be banned outright.
Ultimately consumers are going to decide what makes most sense to them.
We have a different point of view to you Craig, that’s life. I for one are not here to convince you to do it any other way that the way you believe is right.
I have been reading these comments and it doesn’t serve much purpose to get personal and nasty. You can air your views without that. Having said that I agree with Craig that you can give good independent advice REGARDLESS of remuneration. What a lot of nonsense to suggest otherwise. For example I belong to an independent dealer group, i.e. not institutionally owned and I have always given good sincere professional and independent advice. Funnily enough I have never had any complaints or problems to speak of in 25 years of advice mainly on the risk side. I have tertiary qualifications and worked as an Economist prior to running my own business.
@dave what will the ALP look like
The short answer is when you have an ASIC approved AFSL you are not allowed an Approved Product List (APL). You should make reasonable effort to understand as many products as possible and not favor any. Just put the client where you think is in their best interests, as products change you change, at review each year you reconsider.
@Laurie Pennell
only 15 advisers i think there are only 5 practices but Im not sure. The the point is that they are growing quickly. Yes the association didn’t really offer us anything for their fees and we took the view that we wouldnt join at this point. I might review that now and add our team to the 15 taking it to 20+.
I was a commission based adviser from the beginning in 1999 to 2014 and I only did what I though was in the best interest of the client. Thus I agree that the majority of advisers do have integrity and do place the best interest of their clients first. But all advisers have heard many accounts of other advisers placing their financial compensation over the clients best interest. With the avalanche of ASIC findings no one can dispute that there are bad seeds in the personal advice industry.
We can continue to weed out the bad seeds after the event of each client losing everything and our industry will continue to have inquiry and ASIC penalties and undertakings and civil lawsuits. The result of this will be our PI insurance going even higher, low client engagement and lack of respect for our profession.
Thanks for the advice Matthew.
I was fully expecting either you or Ben to deliver a response and you have beaten him to the punch this time.
Must have hit a nerve.
If Dylan is going to tell everyone in our industry they just should “get it”, do you honestly think his approach is doing your cause any favours?
Do you think this approach from a very much minority group, is the way to win over the vast majority?
In an ideal world, you would no doubt wish all advisers would be independent as prescribed by law, however telling others what they should and shouldn’t do just de-values the proposition.
I think I will take my chance on the friends and the influence.
Craig if the spite and confrontation in your posts are anything to go by you’re the last person to be giving advice out on how to make friends or influence people.
And there you have a perfect example Susie in “Dictator Dylan”.
Well said Dylan….that should do a world of good for your cause by keeping 99% of the advisers around Australia completely off side.
Telling everyone exactly what they should do based on a personal belief should work a treat….very smart.
I am thinking of registering a new dealer group called the
INTERDEPENDENT Financial Advisers Australia.
Interdependent meaning “two or more people or things dependent on each other”…that makes a lot of sense!
Our advisers would be dependent on each other to ensure the success of the group
and our clients would be dependent on us to look after their best interests.
We could call ourselves the
“True Interdependents” and we could then promote ourselves as Interdependent Financial Advisers.
I might be on to something….what do reckon Dylan?
The problem is Susie that the shouting down started when several “enthusiastic” members of the true independents movement starting intimating that advice provided by the overwhelming majority of advisers who are remunerated via Adviser Service Fees paid from the product, or from commission payments from Risk Insurance or similar were providing conflicted advice that was not in the best interests of the client.
Now, that may well be the doctrine or philosophy that is believed in by some and that is fine. You are entitled to run your practice and business how you see fit and utilise the model which best suits.
When some of the true independents start inferring that there is only one way going forward and anything else is either out-dated or finished, then of course you will receive some “feedback”.
What the true independents should be doing is playing it smart if they want to win friends and influence people.
(Anti V-I)) You are correct, the law does not agree.
If the adviser receives commissions then there is a possible conflict ‘should’ the adviser recommend more insured sums. as they benefit from the higher insured sums.
Our dealer group My Independent Financial Adviser is looking for advisers that have integrity and want to use the name ‘Independent’. Our clients get it and so should everyone in our industry.
[quote]Does anyone reckon Susie Munro can get any more agitated and one-eyed?[/quote]
Youre partially right Chris.
I do get frustrated when advisers try something different, and they are shouted down because its not what you or others believe. I dont interpret different as derogatory.
One-eyed? No. Theres room for different models. But I definitely believe the true independent model creates an elegant simplicity around the provision of [b]advice[/b] and how that is perceived in the eyes of consumers. I dont think it means the advice is somehow better.
Sorry if my blunt comment offended you, Laurie and anyone else.
Does anyone reckon Susie Munro can get any more agitated and one-eyed?
The very point is that the “true independents” consistently degrade the advice process remunerated via commission and call for the banning of such….irrespective of whether the advice provided is of a high quality.
The majority of advisers appear to be comfortable with the fact that fee for service and commission based advice can co-exist providing a range of options for the consumer. The consumer should have a right to choice and not be dictated to.
What is creating vitriolic response is the fact that the “true independents” commentary is more often than not derogatory of any form of advice remuneration that doesn’t align with their philosophy.
It smacks of religious fervour usually reserved for people who wander the streets door knocking on a Sunday morning wanting to chat about what you are doing wrong and how they can help you to change your life for the better!
Great to see advisers and consumers being offered more choice to choose from. That is the sign of a dynamic industry.
Regardless of business model that is used what is essential is that “good advice” is the result. My personal view is that adviser remuneration doesn’t automatically mean advice is “self serving” or indeed “better” or quite simply “any good”.
…and Roskow had our license granted back in December 2012, but that’s not the point.
What is unique here is that Daniel’s license is opening the door for advisers to be licensed under his license.
So ABC Independent Advisory can be an auth rep of Daniel’s license.
Is My Independent Financial Adviser Pty Ltd also opening the door for advisers to be repped under your license.
If so, yeah, you’re right, you are da man Dylan. Welcome to the jungle. Great to know there is more than one option for advisers who want to be repped and be able to be truly independent (according to s923A – that legal thingy).
Is this the case Dylan? I hope so…!
I would like to post a correction to your story. My Independent Financial Adviser PTY LTD had their AFSL granted on April 2 2014.
They are fully independent and provide conflict free advice by refunding all product provider commissions back to each customer monthly.
Sounds good to me. No payments linked to investment balances or insurance premiums.
What will the APL look like? To be independent, it would have to be exceptionally broad I assume?
Yes Laurie I think you are correct. Who cares if someone comes up and labels themselves as the “first genuinely “independent” dealer group”. Just because you aren’t being remunerated by commission is nt the issue, it’s whether you give good advice based on a clients real needs. So I give good independent advice, not influenced by any institution or dealer group or anything else but am remunerated by commission, so what? The client knows what I am paid. All that matters is that the customer gets the right advice based on needs and you have acted in their best interests.
Wowsers Laurie. If you represent the thoughts of other planners in thinking someone doing something a bit different means they are “trying to tear down all the other good advisers”, the profession is well and truly screwed.
And perhaps if more time was spent on a bit of positive self-promotion (which is quite different from ego-driven “look at me” behaviour), the general public might not think financial advisers are a bunch of self-serving criminals.
The IFAAA is not a true Professional Association as far as I am concerned. They are simply a group of advisers (15 according to their website) who are trying to put down all other advisers. I am tired of seeing Daniel Brammell promoting himself and his group in this way. Why not do something constructive for our profession and stock trying to tear down all the other good advisers out there. I have been a planner for 28 years and are a director of a boutique licensee which has been in existence for 15 years. We have 14 advisers but don’t spend out time trying to denigrate everyone else. We are supposed to present a good image to the consumer and this self promotion does not do this in any way shape or form.
Great work Danny and good luck.
Well said Matt Ross, it is interesting to see some of these comments especially the critics. This make me more determined than ever to prove the likes of Steve and Frank wrong.
Great initiative. The challenge will be to set an attractive flat annual fee for the ARs. I believe that a low annual fee will attract large volumes of disenfranchised Planners who would love to be independent but see cost as the main problem. The success of Dover demonstrates this.
Nice work Danny. Good luck with it. I know it will be a success because you’ve got my support and a lot of other people who believe this is the way forward for financial planning.
Isn’t it nice of “Steve” to offer himself as the official person that we get to prove wrong.
Will be interesting to see how long this AFSL last. Not that I want to see it fail but lets just say I don’t think it will succeed.
The legal definition seems pretty clear to me. Why can’t commission advisers take a bit of criticism? Especially as their voices are usually the loudest criticising the Industry Funds and all their conflict. The more choice for consumers the better I say.
Alan – Tell that to the judge or the ASIC delegate!!!!!!!
Ah so this means that he will not use fund managers that charge fees based on FUM? Or what about advisers that run an MDA and managed on an FUM basis ? The definition is vague .
Really?
Hilariously ‘Holier Than Thou’ attitude does not guarantee any commercial success…
If the clients are happy in the relationship, receive the advice they need and desire and are aware and extremely comfortable (or prefer) with how they remunerate their adviser, do you think they really care?
Really? Remove the stick Danny.
Alan – Here’s the Corps Act section explaining what criteria you need to satisfy to use the term “independent”.
http://www.austlii.edu.au/au/l…
OK, well haven’t you heard about the law?
It’s the old saying, the law is an ass.
Laws are implemented by politicians and many are lawyers so need I say more?
Alan, not sure the Law agrees with you
I am an authorised representative for a totally independent licensee but I do receive commission remuneration for my advice. The fact that I receive commission is completely irrelevant to the “independent” definition. Commission in no way influences my advice and in any event, it is paid at the same rate, more or less, from the insurance companies. We are a truly independent non institutionally owned business.