According to Macquarie’s Accounting and Financial Services Benchmarking report, 79 per cent of firms with less than $2 million revenue said they strive to be independent, while 49 per cent of larger firms chose the same top goal.
“Respondents from smaller AFS firms are much more likely to value independence and achieving a high level of expertise,” the report says.
“Principals of larger firms also value independence, though to a much lesser extent, and are more likely to place value on leadership, respect and happiness.”
When it comes to confidence, both large and small firms said they are the most confident about developing strong and lasting relationships with clients and the least about the impact of regulation.
“Confidence ratings between smaller and larger firms are similar, with the exception of adapting to the impact of regulation, where larger firms are slightly more confident,” the report says.
The report also found that high-performing firms tend to drive growth by leveraging the existing capabilities and client base within their businesses.
Macquarie Wealth Management division director David Clatworthy said, “Nearly 80 per cent of high-performing businesses say adding value to their existing client base is the most effective profitability lever they have in the current market.
“In comparison, firms achieving below average profit are most likely to look outside their business for profitability growth, with 50 per cent reporting new client acquisition as a key profitability driver, compared to 32 per cent of high performers.”
AIOFP derives its membership almost exclusively from the ranks of those who see “independence” as a priority. This includes readily being identified as someone who is working for the client and not a product provider.
Financial advisers are not real estate agents being paid by vendors. They are buyers’ agents being paid by buyers. Real estate buyers know real estate agents are working for a vendor and being paid by a vendor accordingly. If an investor walks into a bank to make an investment they understand the bank is paying the person facilitating the investment. The person facilitating the investment is working for the bank.
If an investor walks into a financial adviser’s office the investor has made a choice to not just invest in a particular bank’s or institutions investments. The investor wants choice and is prepared to pay for the privilege of doing so. These investors assume the adviser is independent of what is invested in and will provide appropriate options that are in the bets interests of the investor, not the product issuer.
At this stage only the conflicted product manufacturers employees can believe in a reality where the investors best interests are allegedly a higher priority than the interest of who is paying their salary.
Independence can be argued to be different things but the real issue is whether the advice being provided is not influenced by what is being invested in.