In a submission to the parliamentary joint committee inquiry into adviser standards, the AIOFP argues that the legal definition of independence should be reviewed in order to shift focus to the problems associated with product manufacturer-owned advice channels.
“With the imposition of FOFA we believe it is time to change the definition of ‘independence’ under section 923A,” the submission states.
“The current definition does not allow the differentiation of independently owned advisers from the institutionally owned/aligned which significantly contributes to consumer confusion.”
The AIOFP argues that an adviser should be able to describe themselves as independent if they operate their own AFSL, have no ownership by a product manufacturer, operate on a “genuine fee for service basis” and only receive research from “non-conflicted sources”.
However, in an upcoming article for ifa magazine, Independent Financial Advisers Association of Australia (IFAAA) president Daniel Brammall argues in favour of the status quo.
“The law is very protective of the word ‘independent’ when used by a financial planner because the law knows how powerful that word is,” Mr Brammall writes.
“There is a misguided view that if an adviser isn’t aligned with an institution then they are independent – if that were true then by this definition Storm Financial was independent.”
Mr Johnston and Mr Brammall – as well as Boutique Financial Planners president Dacian Moses – will be debating the definition of independent advice at a networking event at The Orient Hotel in Sydney on Wednesday night. For more information email editor@ifa.com.au
Anti VI did you mention that Storm were IFA? As I said, business model isn’t a guarantee of quality.
SA, they sure asked me about the CBA scandal and I told them the truth: most financial planners, despite supposedly being committed small business people are really doing the bidding of the big end of town, helping to drive shareholder dividends and – more likely – exec bonuses from the corporate raiders of the banks and amp. i think consumers are realising and its debates like this one that help them understand. i think thats why insto advisers seem so nervous
anti-V do your clients really care or do you bore them for some of your meeting with this diatribe? Quality Financial Advice comes from properly qualified and trained advisers. It doesn’t come from a business structure.
Where is the benefit for the Government in making this change?
It’s all risk to the Government, no reward as I see it.
All the benefit goes to advisers who don’t want to adhere to the definition. Why won’t they change?
Could it be that they are putting their own best interests first? If so, we have a new definition for the word irony.
wow, you guys must spend a lot of time in ‘party line’ training. i do put my clients first, thats why i run my own licence instead of outsourcing it to boardroom crooks. not saying i am unbiased (clearly not), only that the idea of a united ‘profession’ is insto/fpa hogwash. consumers need to know the difference
anti-VI. I am not hot under the collar. Although I am a little annoyed at people being destructive to the industry and profession they are part of for their own ends.
At least I stand for something positive. I stand for clients receiving high quality advice from advisers in whatever model they operate in. Your by line says that you just stand against something. You are representibg a vested interest and it is not that of the client. It is that of an adviser operating model. You are not unbiased in your opinion. admit hat I am not. But in my case I embrace all models that I believe can deliver value to clients. I be;ieve more models wil lead to more advisers and more advice and better outcomes for clients.
This is called being passionate about what advisers do for clients, and the difference they make, not their operating model. Why don’t you join me?
The danger in arguing over semantics is that they (the semantics ) become an end in themselves and override the creation of value for clients. What may seem like a good idea ( eg no use of platforms or fund managers to avoid conflict ) may prove ineffective in managing client portfolios as the business grows. A mature debate will recognise that there is no one size fits all definition that will work for all clients or all business sizes and that a client value proposition needs to evolve rather than be restricted to semantics. The argument that a vertically integrated business model is in itself conflicted and that all clients should have individually tailored portfolios denies the reality of portfolio construction and risk management where implementation efficiencies can significantly enhance client outcomes.
Perhaps the Association of Independently Owned Financial Planners could be right to argue the meaning of an independent financial adviser. In the OXFORD Dictionary :
an independent financial adviser
impartial, unbiased, unprejudiced, neutral, disinterested, uninvolved, uncommitted, detached, dispassionate, objective, open-minded, equitable, non-partisan, even-handed, fair, fair-minded, just;
without favouritism, free from discrimination, non-discriminatory, with no axe to grind, without fear or favour
informal on the fence
The Wednesday Sydney meeting should be very interesting indeed, as well the outcome!
Another example of divide and conquer. With multiple organisation’s arguing semantics it doesn’t send a united message from this industry to the powers that be.
Surely we should be focusing on our clients and what’s best for them.
Neil, methinks thou dost protest too much! bit hot under the collar over where you are? my clients are asking about this stuff, not sure about yours.
Brilliant. Good to see we are concentrating on things that matter to our clients and to the industry we are part of.
Next we will debate the definitions of advice, financial, institution and who knows what else.
Keep up the good work on confusing what matters to the clients and what matters to our own own vested interests in whatever model we work.