In financial advice, perhaps no word has become quite so loaded with politics and subject to legal examination as ‘independent’.
ASIC recently fined a financial services licensee in relation to its use of the words ‘independent’ and ‘non-aligned’ on its website. ASIC has subsequently said that while the words ‘independent’, ‘impartial’ and ‘unbiased’ are prohibited, and the word ‘non-aligned’ is misleading, there is a question over the use of ‘independently-owned’ and it is obtaining legal advice on the matter.
Strictly, it seems, Section 923A of the Corporations Act does not classify ‘independently-owned’ as a restricted word. Yet, ASIC is concerned that referring to independence, even perhaps ‘independently-owned’, may give the impression that a financial adviser is free from the influence and bias of a product issuer.
We will need to wait for ASIC’s final position on this.
But beyond the legal and regulatory questions on the use of the word, are the actual practices of advisers and the perceptions of their clients and the public.
Indeed, the more these perceptions change for the better, the more irrelevant the legalities around the word become.
As the financial planning industry matures into the profession it needs to be, the question of independence will be assumed and will not even need to be used as a marketing by-line. Take lawyers as an example. Their advice is assumed to be independent.
Any influence from a third party, or the appearance of such influence, is highly irregular and usually calls into question their ability to carry out their professional function.
Like lawyers, accountants and other professionals, the real question is about acting for your client. When you act for your client, when you take on their matter, there must be a total focus on securing the best possible outcome for that client. All other considerations pale.
This is reflected in the FPA Code of Ethics. Principle 1 of the code states: “Placing the client’s interests first is a hallmark of professionalism, requiring the financial planner to act honestly and not place personal and/or employer gain or advantage before the client’s interests”.
The other seven principles of the code support this fundamental principle.
The financial planning industry is well on its way to becoming a profession as expressed in the FPA Code of Practice. But only when each and every financial planner believes to their core that to act for their client is their duty and their calling, will financial planning be regarded as a true profession.
You, as a member of the profession, will only be truly part of it when you regard your client’s success as your success, when your ethics becomes your point of pride and when you behave in your client’s interest, not your own.
Being a professional transcends questions of independence. Let’s set our ambitions on something greater, a singular focus on our clients’ best interests.
Marty Carne, general counsel, Centrepoint Alliance
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