On Wednesday night ABC TV’s The Business program ran an opening segment on independent advice, ahead of the IFAAA national symposium in Sydney next week.
“Financial planners are now the butt of TV satires on top of bad press and attacks from industry super funds,” the report began. “[Which is] why a group of independent financial planners is making a stand.”
IFAAA president Daniel Brammall told the program that his organisation has been gaining traction in the advice community in recent months, as previously revealed to ifa.
“We are seeing a small but growing minority of financial planners enquiring with us, week in week out,” Mr Brammall said.
“They are starting to get the idea that there is another way; [that] they can crack out of the mould that they grew up with, become more professional and become genuinely independent.”
The lobbyist and practice principal said the upcoming symposium – for which ifa is exclusive media partner – will explain how advisers can “abandon the conflicts in spite of the industry” and provide strategies for Corporations Act-compliant independence.
Appearing in the same report, shadow financial services minister Bernie Ripoll suggested the consumer-facing media has played a role in changing attitudes towards licensing issues.
“A lot more interest has been taken by mainstream media, which has created an environment for the public; they’re paying more attention and are more tuned in to what’s happening,” he said.
The report also hinted at the Commonwealth Bank financial planning scandal being a factor, showing footage of CBA chief executive Ian Narev telling an audience that the bank “let [its] customers down and in doing so breached [a] fundamental trust”.
FPA chief executive Mark Rantall was also interviewed, speaking more broadly to the need for increased professional standards.
“We know that education standards and professional standards and accountability to those standards does lift the quality of financial advice in this country,” Mr Rantall said.
His comments follow incoming FPA chair Neil Kendall’s suggestion that professional standards are a more significant determinant of behaviour than licensing arrangements.
“Business models do not matter; licensees do not matter,” Mr Kendall said.
Registrations for the IFAAA national symposium close today.
“20% of mums and dads use a financial planner; if we want to engage the other 80% that don’t trust the financial planning profession, we believe that we need to have a business model that delivers this confidence – hence independence.”
I don’t agree that ‘trust’ is the only (or even the main) factor preventing that other 80% from engaging. Many are just ignorant about what a planner can do for them, don’t think advice is affordable and think it is ‘just for rich people’. In overcoming those hurdles, aligned advisers may well have the advantage since they are backed by well known brands and have ready access to this 80%. ‘Independence’ may not be the holy grail which Daniel is holding out that it is.
No offence taken Matthew!
The perception of advisers and financial services pushed to the public has been a continual and concentrated effort by certain media, politicians and your independent colleagues who all have an agenda. It is a promoted and encouraged perception to suit the intended outcome.
Providing the consumer with choice as to how they pay for advice should be their right to decide and which model suits them best. It is not for you or I to mandate or decide and to remove choice unless you believe the consumer does not have a right to choice.
If that is the case, it can begin to sound rather righteous.
As Daniel Brammall was quoted as saying:
“The grass is genuinely rich and green on this side of the fence”, could be perceived by some as a little evangelical in it’s nature.
I totally agree that the client should always be the absolute focus and their best interests a priority, however,they should have a right to choice.
There’s an old adage in life – if someone is pushing a particular unusual proposition, sceptics should ask the question, what’s in it for the promoter.
There’s a lot of “marketing ” or positioning going on right now in our industry, and the ABC, like most general media, does not have an interest or resources to dig down
So proponents of various advice regimes with marketing smarts get noticed, particularly if the pitch confirms to a “no commissions” media mindset
One relevant question relates to number of members of IFAAA. Remember the Pedestrian Council has just one family as Members
Clients expect the adviser to be paid. The issue is who is paying and whether the client knows what is really being paid for the service. A fixed fee or asset management fee, or whatever is not, and should not, be the issue. However the client should be paying whatever fee and should know they are paying it. A fee should not be paid by the recipient of the clients investment funds as it simply introduces the potential for conflicted advice, whether the adviser intends such to be the case or not.
Vertical integration is only a problem if it is used as a device to hide who is getting paid. If used to create operational efficencies it is simply good sense to eliminate unnecessary cost no matter who gets the benefit.
Independent is a term that unfortunately means different things to different people. Frequently for good reasons. What is the underlying issue is not whether an adviser makes a buck, or how many bucks, but rather whose interest they are working for. Clearly an adviser is working first and foremost for his or her own interests and to suggest otherwise is simply unrealistic.
Direct fees are completely transparent which gives mums and dads more confidence in what we do as it is easier to understand – and that leads to a greater feeling of trust.
Independent advice removes conflicts of interest which again leads to greater confidence and feeling of trust in the eyes of mums and dads.
This is all about perception Craig, how the public perceives us. This isn’t about offending other advisers.
20% of mums and dads use a financial planner; if we want to engage the other 80% that don’t trust the financial planning profession, we believe that we need to have a business model that delivers this confidence – hence independence.
Disclosure isn’t enough in the eyes of many consumers. They want a structure which has them at the centre of the business model.
On 28th Oct IFA published the article by Daniel Brammall “What it takes to become independent”, and he stated that
“Independent = Trustworthy”.
This incorrectly infers that truly independent advisers are therefore trustworthy. This cannot be measured as the quality of being trustworthy is inherent within the individual.
An adviser who meets the legal requirements of the definition of truly independent may be trustworthy or conversely may be totally untrustworthy. It is incorrect for Daniel Brammall to suggest otherwise as he could not and would not know.
By inferring that truly independent advisers are trustworthy also suggests that advisers who do not meet the legal definition of truly independent are therefore untrustworthy.
This is incorrect as Daniel Brammall could not know.
He also referred to commissions and asset fees as incentives. Direct fees charged for advice are also clearly an incentive and reward for the provision of that advice.
VI is dead