It is estimated that as many as 85% of financial ‘planners’ are aligned with large institutions. This is a shame, as being non-aligned is the only way to be a genuine adviser.
The Australian Securities and Investments Commission (‘ASIC’) is the Government body in charge of regulating financial planning in Australia. ASIC has been in the news lately, talking about its recent investigation into the financial advice services provided by Australia’s big banks, including the AMP.
The report makes for gloomy reading: more than 200,000 customers were charged fees for services they simply did not receive. Financial planners operate under the authority of what is called an Australian Financial Services Licence (‘AFSL’). These licences are issued by ASIC and it is estimated that as many as 85% of all financial planners in Australia operate under the authority of one of the big banks’ (including AMP) AFSL.
These financial planners are known as ‘aligned’ planners. This is because the AFSL under which they operate shares common ownership with an institution that also provides financial products such as life insurance or managed funds. The bank owns the AFSL and it owns the products being recommended by advisers within that AFSL. You can see the obvious conflict! An AMP representative will recommend AMP products. A Westpac adviser will recommend Westpac products. These institutions have traditionally viewed their adviser networks as another distribution channel for products. End of story.
As advisers ourselves, we need to operate under the authority of an AFSL. When we went looking for an AFSL under which to operate, we looked specifically for an AFSL that was ‘non-aligned.’ Non-aligned means the opposite of aligned: an AFSL that is not tied to any provider of financial products. No bank or product provider AFSL for us. We did this because we want to be genuine advisers. We did not want pressure to sell a specific product, but to be free to recommend anything that we truly think is in our client’s best interests – no matter which institution is offering it.
This means we can be real advisers. We can look our clients in the eye and tell them honestly that the advice we have given them is what we would do if we were in their shoes. ‘What I would do if I were you’ is the only way to be a proper adviser. We wanted to avoid working for an institution that charges people for work it never performed or uses advice as a form of distribution, that’s why we are proudly non-aligned. It is the only option for a genuine adviser.
Rob Gilmour is the Managing Principal of MORE Wealth Management. The information provided should not be considered personal financial advice as it is intended to provide general advice only. The content has been prepared without taking into account your personal objectives, financial situations or needs. You should seek personal financial advice before making any financial or investment decisions.